KEY POINTS:
The New Zealand sharemarket hit its lowest point since March 2004 yesterday as investors faced more negative news in the local reporting season amid overseas market turmoil.
The benchmark NZX-50 fell 38 points or 1.48 per cent to close on 2538 points in its sixth negative day in a row.
Yesterday's drop topped the four-and-a-half year low hit on November 24 when the NZX-50 touched 2575 points.
The biggest fall came from ProvencoCadmus, which lost 37.5 per cent of its value, dropping from 4c to 2.5c in the wake of last Thursday's warning that its banking facilities are due to expire at the end of this week.
Yesterday it told capital noteholders it would be rolling over the debt for less than a year and those who did not accept the conditions could take up shares.
Retailer Hellaby Holdings, owner of Hannahs and Number 1 Shoes, also saw a major drop, falling 22 per cent, from 90c to 70c, as it prepares for a half-year result on Thursday.
Tourism Holdings continued to decline, dropping 6c to 49c after announcing a half-year loss.
Hamilton Hindin Greene client adviser James Smalley said the New Zealand market was reflective of the negative equity leads from overseas and the trail of negative news emerging from New Zealand's reporting season.
Smalley said a lack of future earnings guidance and high debt levels were causing the most concern for investors.
"A lot of companies are reporting baseline earnings that are not bad. The problem is they can't give any guidance. As an investor, if you don't know what the earning is, how do you value them?"
Smalley said while debt in itself was not bad, it was a huge headache if it could not be refinanced. Talk of the United States government having to bail out Citigroup was also discouraging for investors who had already been hit by the share price falls and may now face the value of their shares being diluted further by intervention.
Smalley said the markets were being led by the finance sector and every time there was bad news in the sector the rest of the market was hit.
"Wall St - that is where it started. And we are going to have to see some lead there before it ends."
Smalley said firms were being caught in a double-whammy as their sales were hit by the global recession while banks had yet to pass on the interest rate cuts.
"It's the banking system that is creating problems - we have not seen the low interest rates and free up of liquidity translate into the real economy. Markets don't like uncertainty and that is what we have had for the last 18 months. It's just another chapter in that."
ASB Securities adviser Stephen Wright said the slide stemmed from the profit warning from Fisher & Paykel Appliances last week and had continued as investors worried about the health of local companies.
"The F&P downgrade certainly became the catalyst.
Investors are worried about the same things as last week - they are worried about the corporate health of the likes of F&P, Nuplex and PGG Wrightson."
Wright said the market had had a couple of false dawns since the low in November, but there was no sign that it had hit the bottom yet.
"There are still too many negative features and not enough positive news."
Fisher & Paykel Appliances yesterday closed down 4c to 55c while Nuplex was down 20c to $1.25.
PGG Wrightson gained 6c to close at 65c.
