A2 Milk Co and Synlait Milk are coming in for a correction with both stocks down more than 20 percent from recent peaks, dragging the S&P/NZX50 Index lower.
Around 11.15am today, A2 sank 9.5 per cent to $6.90, while Synlait had dropped 11 per cent to $6.45. The benchmark index had fallen 0.9 per cent to 7,977.72, the first time the NZX50's been below 8,000 in more than a month. The two stocks began falling on Friday, with A2 having dropped 18 per cent since then and Synlait down 19 per cent.
Grant Williamson, a director at brokerage Hamilton Hindin Greene, said both stocks were seeing a good size correction "which was always going to happen" after their rapid gains this year. A2 is still up 260 per cent year to date, while Synlait has gained 133 per cent.
A2 has declined 21 per cent from its record $8.75 on October 30, while Synlait has fallen 22 per cent from its record $8.24 the same day. A2's rapid ascent made it one of the largest stocks on the local index, and its losses today puts "quite a weight" on the benchmark index, Williamson said.
"Synlait is very much just following A2, they're joined at the hip to some extent," Williamson said. "In these stocks, you get a bit of selling and it's followed by more selling - it doesn't take much. It's difficult to know where it's going to bottom out."
Williamson said high volumes through A2 showed the selling wasn't limited to retail investors, but also included large institutions, and volumes would increase when the Australian share market opens at midday New Zealand time.