The NZX-50 index is down one per cent in trading today.
The slide means the NZX-50 has now fallen nearly 7 per cent since it hit a record high on September 7.
It comes after historic volumes of foreign money have flowed into the market.
New Zealand's markets face a major withdrawal of international investors as US inetrest rates start to rise, says Pie Funds chief executive Mike Taylor.
Nearly 50 per cent of the free-float of the New Zealand market is now owned by foreign investors compared with as little as 25 per cent four years ago.
With US interest rates near zero investors there have been chasing higher yields in markets that are considered stable and safe and New Zealand - which a number of relatively high yielding dividend stocks in sectors like infrastructure - has benefited.
"It's been a phenomenal amount of money coming into our market," Taylor says.
The catalyst for the change in sentiment was US interest rates - which are expected to rise in December - signalling a shift from equity investments towards bonds.
"It could be the case that some of those foreign investors don't want to all be rushing to the exits at the same time so some are saying: I've made a nice return on the currency, a nice return on the equities, perhaps now is the time to take profits."
Long term, Taylor said he expected the local market would continue to be underpinned by the strong dividend yield stocks like Auckland Airport and the power companies.
If the NZX did fall in value significantly over the coming months then it could present a buying opportunity for local investors.
Meanwhile it was a good time for investors to assess their position and take some profits after what has been a bull run of historic proportions.