New Zealand shares fell, led by a slump in Kathmandu Holdings after the retailer raised funds at a steep discount. Fears about the severity of the Covid-19 outbreak in the US also weighed on investor sentiment.
The S&P/NZX 50 Index dropped 55.52 points, or 0.6 per cent, to 9.870.56. Within the index, 31 stocks fell, 14 rose, and five were unchanged. Turnover was $157.2 million.
Kathmandu led the market lower as it slumped 27.7 per cent to 81 cents. The retailer raised $154m at 50 cents a share from institutional investors, and is seeking another $53m from retail investors, although cornerstone shareholder Briscoe Group isn't participating. Its shares rose 3 per cent to $2.75.
Kathmandu was told to raise the funds by its bankers to get a waiver on its lending covenants. Kathmandu's stores are closed around the world while it waits out the Covid-19 lockdowns.
"The fact that Briscoes isn't taking part is telling. They have their own issues to deal with, but consumer discretionary spending is in for a rough ride, even when we do eventually come out of lockdown," Fat Prophets head of research Greg Smith said.
"The timing of buying Rip Curl now looks pretty bad in retrospect. There's a lot of uncertainty, and consumers' pockets are going to be fairly tight globally for some time yet."
Investors were also worried about the growing impact of the outbreak in the US. Overnight the federal government warned modelling showed between 100,000 and 240,000 people could die from the virus outbreak — even if federal guidelines on containing the virus are followed.
Michael McCarthy, a market analyst for CMC Markets, said the shift in rhetoric from US President Donald Trump pulled sentiment lower as some US investors had previously viewed the outbreak as being over-hyped.
"The leader of that school of thought changing his rhetoric has an impact on sentiment," McCarthy said.
Locally, the Reserve Bank changed the conditions of local bank registrations prohibiting them from paying dividends through the Covid-19 crisis.
"This cut to dividends comes at a time when governments are striving to put cash in the hands of consumers and central banks have pumped the financial system to ensure financial markets liquidity and security," McCarthy said.
"It is concerning for shareholders who rely on those dividends, but secondly it goes against everything else being done around the world to make sure economies survive the outbreak."
Banking stocks were all weaker today. Australia and New Zealand Banking Group fell 5.4 per cent to $16.64, Westpac Banking declined 3.4 per cent to $16.68, and Heartland Group fell 5.1 per cent to 93 cents.
Tourism Holdings dropped 10.6 per cent to 93 cents as new coronavirus anxiety flowed downstream from the US.
Kiwi Property Group declined 4.8 per cent to 89 cents, Argosy Property fell 2.8 per cent to 88 cents, Goodman Property Trust decreased 1.8 per cent to $2.14 and Precinct Properties held at $1.69.
Two of the biggest stocks on the index were also weaker, with Fisher & Paykel Healthcare down 1.5 per cent at $30.50 and A2 Milk 1.3 per cent lower at $17.08.
NZX Limited was unchanged at $1.10. McCarthy said although a big drop in the share market does hurt consumer thinking, it also leads to surging volumes which could help the securities exchange firm.
Fletcher Building rose 1.4 per cent to $3.55. The construction company is in talks with staff about a progressive step-down in pay over the next 12 weeks to help the firm get through the lockdown.
Pushpay Holdings posted the day's biggest gain, up 7.4 per cent at $3.64.
Meridian Energy rose 6.4 per cent to $4.31 after confirming the Tiwai Point aluminium smelter will reduce its contracted electricity supply for the fourth potline.
NZME increased 1.6 per cent to 19 cents. Magazine publisher Bauer Media today said it is closing its New Zealand business due to the collapse in advertising.