New Zealand shares fell, paced by Spark New Zealand, as offshore investors sold yield stocks on the prospect the US Federal Reserve may start hiking rates sooner than anticipated, and increasing the returns on offer in the world's biggest economy. Energy stocks fell as New Zealand's general election draws closer.
The NZX 50 Index fell 47.445 points, or 0.9 percent, to 5142.34. Within the index, 30 stocks fell, 12 rose and eight were unchanged. Turnover was $162 million.
The Fed will update the market on monetary policy after its two-day Federal Open Market Committee meeting in Washington, and a run of strong data has raised expectations the central bank might start talking about moving away from running a zero interest rate policy that's been in place since the global financial crisis. Higher US interest rates would encourage some investors to repatriate funds back to the world's biggest economy which have been sitting in yield-bearing assets around the world.
Spark, formerly Telecom Corp, extended its decline from a six-year high, dropping 3.4 percent to $2.945. The telecommunications company is a popular stock with offshore investors because of its liquidity and high dividend yield. Some $19 million of Spark shares changed hands today.
"Spark has been a stock that people have looked at for yield, predominately from offshore, and the locals don't see it as being cheap," said David Price, broker at Forsyth Barr. "The offshore guys want to sell a bit of stock but the buying from the locals will be a bit more selective. A lot of the yield-type stocks have had a rough time."
