New Zealand shares dropped in a sea of red after North Korea fired a nuclear missile over Japan, with Chorus and Metro Performance Glass extending their recent declines.

The S&P/NZX50 Index sank 88.53 points, or 1.1 per cent, to 7,738.34. Within the index, 34 stocks fell, 12 were unchanged and four rose. Turnover was $170 million.

"The stocks that haven't delivered have continued bearing the brunt of the selling - Chorus is top of that queue - but in general, most of the market is not taking the Korean activity too kindly either, you've had a broad brush sell off in pretty much every market that's open at the moment," said David Price, broker at Forsyth Barr. "At the end of the day, earnings season came in ahead but the thing we have seen is cuts to FY18 numbers - revenue, earnings per share and divs. It's looking a bit softer than previously thought."

Stocks across Asia fell amid reports North Korea fired a ballistic missile over Japan's northern island of Hokkaido, sapping investors' appetite for riskier assets such as equities. At 5:10pm New Zealand time, the ASX was down 1 per cent, the Hang Seng was down 0.4 per cent and the Nikkei 400 had fallen 0.2 per cent.


"We've had massive PE (price-to-earnings) expansion, the market needs to have a pickup in earnings to justify some of the re-ratings the stocks have had," Price said. "You've got markets trading at all-time highs on a PE basis and an absolute basis, earnings are growing but probably not fast enough to justify the prices we're seeing."

Chorus plunged 7.7 per cent to $4.05, a five-month low, and leading the index lower for a second day. Yesterday, the network operator lifted annual profit 24 per cent to $113m after cutting costs and changing the way it capitalises some labour costs, making up for a decline in connection numbers that's been driven by its biggest customer, Spark New Zealand. It forecast gross capital expenditure for 2018 of $780m-$820m, up from $639m in 2017.

"There's decent sized volume and a decent sized haircut on the day," Price said. "Debt levels going up, they're increasing the dividend which was not expected so that becomes an issue from the rating agency point of view, they're having to spend more on marketing; there's a number of little crosses."

Metro Glass dropped 3.7 per cent to $1.05, hitting a record low. Trade Me Group fell 3.2 per cent to $4.51 and Vista Group International declined 2.8 per cent to $5.19.

Investore Property was the best performer, up 0.7 per cent to $1.36.

Outside the benchmark index, Airwork Holdings declined 4 per cent to $4.32. It lifted annual profit 0.7 per cent to $24.8m, in line with its guidance, as a bigger fleet in its fixed wing division delivered better earnings offsetting a weaker result from its helicopter unit. Revenue rose 1.4 per cent to $168.4m.

New Zealand Oil & Gas gained 1.5 per cent to 69 cents. It was back in the black and kept its dividend unchanged after reaping a $95m gain on the sale of its stake in the Kupe oil and gas fields and trimming its operating and exploration costs. The Wellington-based company reported a net profit to shareholders of $61.2m, or 20 cents per share, in the 12 months ended June 30, turning around a loss of $35.9m, or 8.6 cents, a year earlier.

Veritas Investments was unchanged at 15 cents. It has to find $28.5m in the next year or so after ANZ Bank New Zealand said it won't renew its banking facilities as they come due.