New Zealand shares plunged in the biggest sell-off since before Brexit, joining a global rout on concerns interest rates are set to rise and high-yielding companies will be hardest hit. Tower, Fletcher Building and Air New Zealand led the decline.
The S&P/NZX 50 Index dropped 188.83 points, or 2.5 per cent, to 7279.76. Within the index, 48 stocks fell, one rose and one was unchanged. Turnover was $131 million.
The local index's fall followed a Wall Street weekend sell-off after US Federal Reserve officials made comments which sparked fears of a rate hike as soon as next week.
"We've been one of the best-performing markets of the year, our market's just gone up and up, it's really priced to perfection and due for a bit of a pullback," said Mark Lister, head of private wealth research at Craigs Investment Partners.
"Also, many of the companies on the market are the high-yield dividend payers, and those are exactly the type of companies that stand to be the biggest losers from interest rates around the world going up."
Tower was the worst performer on the local index, falling 5.9 per cent to $1.04. The shares slumped last week after the general insurer warned it expects to have to fork out more for Canterbury earthquake claims and signalled it will review its dividend and its dividend policy at its full-year earnings result.
Stocks fell across the board, and Lister said that while you would expect growth companies such as Fletcher Building, which dropped 4.4 per cent to $10.61, or Air New Zealand, which fell 5.4 per cent to $1.935, to be sensitive to market movements, more solid income stocks were also falling.
Meridian Energy dropped 4 per cent to $2.88 and Chorus fell 3.3 per cent to $4.05.
The only stock to gain was Investore Property, which rose 0.6 per cent to $1.62.
Outside the main index, GeoOp fell 23.1 per cent to 25c. The management app developer said it planned to raise $3.6m in a discounted rights offer.
The NZAX-listed company will issue up to 17.9 million new shares at 20c apiece, a 38 per cent discount to where the shares traded before the announcement of 32.5c.
"It's a negative announcement and not a great day to do it, but it'd be getting pounded anyway," Lister said. BusinessDesk