NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Personal Finance

<i>NZ Market Report</i> - Retail investors run for the exits

By Adam Bennett and Tamsyn Parker
Herald online·
29 Sep, 2008 11:15 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

KEY POINTS:

The US Congress' rejection of Wall St's crucial trillion dollar rescue package saw the New Zealand share market dragged steeply lower this morning with retail investors running for the exits.

The US Treasury's US$700 billion plan to buy bad US home loans from struggling banks was narrowly rejected
by Congress early this morning New Zealand time sending Wall St's key Dow Jones Industrial Average 770.59 points or 6.92 per cent lower to 10,372.54 in its worst decline since it reopened after the September 11, 2001 attacks.

The NZX-50 plummeted more than 4 per cent within minutes of opening and was down 4.3 per cent shortly before midday.

Amongst the market's top stocks Telecom fell 14c to 42.64, Contact Energy fell 32c to $7.97 and Fletcher Building was down 35 cents to $6.56.

Market commentator Arthur Lim said while the losses were fairly steep, turnover was not huge.

"I would say at this stage there's a fair bit of retail selling plus some marginal institutional selling. Institutions know that in this kind of market if you try to sell in volume, the share price will drop 10 per cent on you. It can't realistically be done."

Lim believed retail investors were still haunted by the memory of 1987 bloodbath, from which the New Zealand market, unlike most others never recovered.

"We are getting some investors simply saying get me out at any cost."

"The mindset is a high level of nervousness, when something like this happens you are liable to get this panic reaction."

ASB chief economist Nick Tuffley says further falls in the New Zealand sharemarket will depend on how other Asian markets open today.

All eyes will be on Australia's sharemarket which opens at 1pm New Zealand time.

Australian financials like Westpac and ANZ which are listed in New Zealand and Australia have already been hit hard in New Zealand and are expected to fare worse in Australia.

"As we go through each time zone the markets will digest the news and we are likely to see equities take a big hammering today," he says.

Beyond today Tuffley said it would depends on how the markets settle and whether the US authorities came up with another proposal.

One thing is certain is that the high level of volatility New Zealand has seen this year is set to continue.

Tuffley said the pressure on equities and the US dollar meant investors were fleeing into US Treasury bonds - seen as a safe haven. While big saver nations like Japan pulled their money back resulting in a stronger Yen versus the greenback.

Longer term Tuffley said the failure of the plan could result in a longer period of slow growth in the US which would impact on global growth.

While only 10 per cent of New Zealand's exports go to the US this country also exports to Asia and Europe where the effects of the US down-turn are likely to be felt later.

"Yes we are in a mild recession at the moment. Some of the adjustments that are going to have to be made by other countries have already been put in place here. Interest rates are coming down and tax cuts will help put a floor under our economy.

"Next year we will recover but it will be a weak recovery dragged down by our very weak property market.

"The US economy had been holding up well. At best it will be flat. But it could be heading for recession which it has managed to stem off to date."

Arthur Lim said the companies on the NZX these days were generally 'very solid stable businesses' with strong balance sheets unlike the highly leveraged spectacular casualties of `87 such as Chase Corporation and Equitycorp.

Moreover, New Zealand should be somewhat immune to really sharp falls because investors here had not borrowed to invest in stocks as much as there offshore counterparts.

In what are known as margin calls, leveraged investors are often forced by lenders to sell their holdings once their paper losses reach a certain point. That selling will in turn force stock prices lower.

"That's where a lot of the hurt is happening out there."

However Lim said things could have been much worse on Wall St overnight if not for the current ban on short selling, where investors sell stock they have borrowed in the belief they will be able to buy it back and return it to the lender later on, thereby booking a profit.

"By virtue of them selling even more aggressively they hope to precipitate what can be described as panic. It just feeds on itself."

Lim said the present turmoil would likely continue for the next few days until US Congress reconsiders the bail out plan.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from Personal Finance

Premium
Business|personal finance

Tens of thousands more Kiwis seeking financial help from KiwiSaver

09 Jun 05:00 PM
Interest rates

Another major bank cuts mortgage and deposit rates in NZ

08 Jun 11:21 PM
Premium
Tax

Why charity tax reform got kicked to touch

08 Jun 09:00 PM

Why Cambridge is the new home of future-focused design

sponsored
Advertisement
Advertise with NZME.

Latest from Personal Finance

Premium
Tens of thousands more Kiwis seeking financial help from KiwiSaver

Tens of thousands more Kiwis seeking financial help from KiwiSaver

09 Jun 05:00 PM

KiwiSaver hardship withdrawals have spiked to new highs.

Another major bank cuts mortgage and deposit rates in NZ

Another major bank cuts mortgage and deposit rates in NZ

08 Jun 11:21 PM
Premium
Why charity tax reform got kicked to touch

Why charity tax reform got kicked to touch

08 Jun 09:00 PM
Sharesies boss: Why Kiwis are better investors than we think

Sharesies boss: Why Kiwis are better investors than we think

08 Jun 06:00 PM
Clean water fuelling Pacific futures
sponsored

Clean water fuelling Pacific futures

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP