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NZX 50 index drops below 12,000 points

New Zealand's main share index plunged almost 200 points to its lowest level since October 2020 as investors ditch stocks across the board in response to rising interest rates.

Friday, January 28th 2022, 6:55PM

by BusinessDesk

The S&P/NZX 50 Index fell 198 points, or 1.6%, to 11,852.15. Turnover was $202 million.

Equity markets have been in decline for the entire month as investors recalibrate company valuations in the context of higher interest rates, which are expected to shoot up as central banks try to rein in inflation.

“The US Federal Reserve got inflation wrong and the scramble to deliver interest rate hikes this year is sending the best-performing assets during the pandemic tumbling,” said Oanda analyst Edward Moya.

Moya said the ‘buy-the-dip’ crowd had found a new motto, ‘sell-the-rally’ and were aggressively offloading shares in response to any upward movement.

The Reserve Bank of New Zealand (RBNZ) has moved a little faster and began to tighten monetary policy late last year, but inflation has still climbed to almost 6% and cemented a policy response in February. 

NZ government bond yields receded from their highwater mark today but share prices continued to plunge.

Electricity generator Mercury NZ led the decline, falling 4.5% to $5.55. Vector dropped 3.9% to $3.75, and Meridian Energy was down 3.6% to $4.34.

Milford Asset Management today reported it had invested $60m in Contact Energy since August last year, buying an aggregate of 7.7 million shares for approximately $7.85 each.

Shares in Contact Energy were down 1.3% at $7.55 today, but Forsyth Barr upgraded the stock’s target price to $8.20 this week.

The analysts said its December operating performance was another record and whole market conditions were favourable.

Aged-care stocks continued to fall on fears of a slowdown in the property market and the risk posed by the omicron outbreak.

Oceania Healthcare fell 4.2% to $1.14, and Ryman Healthcare fell 3.4% to $9.85.

Vital Healthcare Property Trust Units declined 2.9% to $3.01 today but have remained remarkably resilient compared to the wider market.

Units in the property trust are only down 3% this year with the company fairly immune to the interest rate problems of other stocks.

“Vital has a natural hedge against the impact of rising inflation on interest rates. Approximately 90% of its annual rent reviews are structured, with fixed increases based on the consumer price index,” said Forsyth Barr analyst, Rohan Koreman-Smit.

Chorus had the index’s largest gain, climbing 2% to $6.84. Move Logistics also bounced 2% to $1.52.

ANZ Bank rose 1.5% to $29.34, and Westpac Bank climbed 2% to $22.02. Banks often have greater earnings when interest rates are higher as they earn more from making loans.

The NZ dollar took another hit and was trading at 65.76 US cents at 3pm in Wellington, down from 66.39 cents yesterday and down more than 3% in the past ten days.

This move is also driven by the US Federal Reserve planning to raise interest rates, which is virtually the only thing holding the market’s attention right now.

Tags: Market Close

« Shares fall as inflation heats upNZ shares bounce from sell-off »

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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 5.95 6.40 6.59
ANZ Blueprint to Build - - - -
ANZ Special - 5.35 5.80 5.99
ASB Bank 5.85 5.35 5.80 5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - 5.35 5.69 5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 5.95 6.29 6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 ▲5.35 ▲5.85 -
Heartland Bank - Online 4.10 ▲4.90 ▲5.29 ▲5.59
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 ▲5.35 ▲5.80 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
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SBS Bank Special - ▲5.15 ▲5.59 ▲5.69
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TSB Special ▲5.50 ▲4.85 4.99 ▲5.65
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Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 5.95 6.29 6.59
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Westpac - Offset 5.94 - - -
Westpac Special - 5.35 5.69 5.99
Median 5.87 5.35 5.77 5.99

Last updated: 30 June 2022 9:19am

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