New Zealand shares dropped to a one-week low as higher interest rates reduced demand for reliable dividends from the likes of Meridian Energy and Spark New Zealand.
The S&P/NZX 50 Index fell 217.7 points, or 2 per cent, to 10,924.88. Within the index, 36 stocks dropped, nine rose, and five were unchanged. Turnover was $176.6 million.
The local market was the worst performer across Asia-Pacific as bond yields followed US Treasuries higher. New Zealand's 10-year swap rate at 1.37 per cent has climbed almost 20 basis points this month. Low interest rates have underpinned the NZX50's high proportion of yield stocks, such as utilities and property investors, and they were among the hardest hit in today's sell-off.
Meridian led the market lower, down 5.1 per cent at $5.08 on a volume of 2.2 million shares, more than its 90-day average of 1.4 million. Spark dropped 4.8 per cent to $4.425 on a volume of 4.3 million shares, Z Energy fell 4.4 per cent to $6.30 with 1.5 million shares changing hands, Mercury NZ declined 3.8 per cent to $5.33 on a volume of one million and Contact Energy was down 3.7 per cent at $8.45 with one million shares traded.
"We've seen that dramatic drop in yields rebound a little bit and that's part of the reason why our market is getting sold off," said Peter McIntyre, an investment advisor at Craigs Investment Partners. "It suggests we are seeing a bit of offshore selling in our market."