Market close: Allbirds plunges on poor showing; stocks feel brunt of US bank failures

New Zealand and other offshore sharemarkets rallied after United States regulators took quick action to stem a widespread banking crisis.

The S&P/NZX 50 Index recovered late in the day and closed at 11,672.9, down 54.14 points or 0.46 per cent after reaching an intraday low of 11,543.58 following the collapse of Silicon Valley Bank (SVB) and Signature Bank in California.

The index, however, is back to the same level at the start of the year – it sat at 11,664.87 points on January 12.

Allbirds founder Tim Brown at his Auckland City store, for Business Hub. 03 May 2022 New Zealand Herald photograph by Dean Purcell.

There were 92 decliners and 42 gainers over the whole market on volume of 27.15 million share transactions worth $92.55 million.

Technology-focused lender SVB, the 16th largest bank in the US, went into receivership following losses in its bond portfolio, prompting the biggest bank failure since the global financial crisis in 2008 and sending shockwaves through the banking sector.

Matt Goodson, managing director of Salt Funds Management, said the action taken by the US Treasury, Federal Reserve and Federal Deposit Insurance Corp has been sensible and [risk of] a systematic banking failure appeared to be low.

“The regulators have wiped out the equity holders and unsecured bondholders in the two banks but have ensured that depositors will get their money back through the sale of loans and bond assets and bring an end to the run [on the banks].”

Goodson said the central banks have to take some of the blame by reducing interest rates to zero or near to it and provide incentives for borrowing and risk-taking.

“It’s a failure in monetary policy that comes back and bites you. People were expecting the Federal Reserve to increase interest rates a further 50 basis points but now they expect 25 basis points or nothing,” he said.

After another sell-off on Wall Street [Saturday morning NZ time], US stock futures were up 1.57 per cent before the markets reopen overnight. Across the Tasman, the S&P/ASX 200 Index was down as much as 0.8 per cent before recovering to 7111.2 points, down 0.47 per cent, at 6pm NZ time.

New Zealand-bred merino footwear retailer Allbirds plunged 47 per cent to US$1.25 ($2.01) on the Nasdaq Composite after reporting disappointing holiday sales and widening its net loss to US$24.9m ($40.17m).

The company has lost US$101m in its first year as a public company, and its share price has fallen 95 per cent from a peak of US$26.76. It has gone from a multi-billion-dollar company to one worth US$200m.

Two New Zealand-listed stocks had business with SVB and will receive their money back.

Comvita, down 1c to $3.35 after turning around from an intraday low of $3.21, told the market its United States skincare joint venture Caravan Honey had US$2.5m deposited with SVB.

Likewise, ikeGPS has US$3.2m deposited and its share price decreased 2c or 2.13 per cent to 92c.

Other local technology companies Rakon (falling 4c or 4.3 per cent to 89c), Vista Group (down 2c to $1.34), Serko (gaining 7c or 3.11 per cent to $2.32), and AoFrio (formerly Wellington Drive Technologies, unchanged at 11.1c), said they had no exposure to SVB.

United States-listed Rocket Lab, an entrepreneurial favourite for New Zealand, has US$38m or 7.9 per cent of its total cash reserves deposited with SVB and in after-hours trading its share price had fallen 4.17 per cent to US$3.85 – well below its high of US$18.69 achieved in early September 2021.

Marlin Global Fund, down 4c or 4.35 per cent to 88c, has 3.3 per cent of its offshore investment in Signature Bank, which is now under Federal Deposit Insurance Corp control “in order to stabilise the banking system.” The move protects deposit holders but not shareholders.

Among the leading stocks, Fisher and Paykel Healthcare was down 46c or 1.79 per cent to $25.25; Mainfreight declined 58c to $69.90; Chorus gave up 6c to $7.82; and SkyCity fell 10c or 4.1 per cent to $2.34.

Fletcher Building was down 11c or 2.38 per cent to $4.52 after telling the market it has been served with a shareholder class action filed in the Victoria Supreme Court. The legal action relates to Fletcher’s disclosures about its building and interiors business between August 17 2016 and October 23 2017, and shares bought by investors during that period.

Skellerup Holdings declined 8c to $5; Restaurant Brands was down 17c or 2.65 per cent to $6.24; Air New Zealand decreased 1c to 79c; Gentrack shed 12c or 4.27 per cent to $2.69; and Sky TV was down 5c or 2 per cent to $2.45.

The leading banking stocks were largely unaffected, though Heartland Group declined 7c or 4.05 per cent to $1.66. ANZ was down 17c to $25.35, and Westpac declined 28c to $23.15. Geneva Finance fell 4.5c or 12.68 per cent to 31c.

Heartland is mourning the death of founding director Geoffrey Ricketts who was the board chair from 2013 to February this year.

Among the gainers, Mercury Energy improved 10c to $6.35; Port of Tauranga climbed 11c or 1.8 per cent to $6.23; Argosy Property was up 1.5c to $1.155; NZME increased 2c or 1.85 per cent to $1.10; and Private Land and Property Fund rose 6c or 4.72 per cent to $1.33.