KEY POINTS:
Investors and brokers endured yet another day of steep but now commonplace losses on the New Zealand sharemarket as the index fell more than 3 per cent to a fresh four-year low and the kiwi plumbed 5 1/2-year lows.
The Labour Day holiday on Monday probably spared the NZX the mauling suffered by Asian markets, but yesterday the local market played catch-up, closing 94 points or 3.38 per cent lower at 2684.73, its weakest close since July 2004.
Once more it was blue chip stocks hit hardest, with Fletcher Building down 27c at $5.53 and Contact Energy down 21c at $6.64. Telecom escaped with only minor bruising, down 4c at $2.27.
With so many commentators over the past few months having called the bottom of the sharemarket carnage, only for additional bad news to send markets sprawling further, Macquarie Equities head of retail John Rowley was not about to make predictions.
"Is the market now cheap? It probably is but you probably want to verify that with a little bit more texture around company earnings going ahead. It's one thing agreeing that we might be near the bottom, it's another determining what that means from a company earnings point of view, that's the big question."
Rowley said New Zealand investors could at least take some comfort in the fact that local interest rates were "still pretty healthy".
"At some point if you believe in the cycle recovering, then equities are going to be oversold. It could be today or it could be tomorrow but there's going to be an opportunity there. Meanwhile, in the short term it's very simple, cash is the parking lot."
Forsyth Barr broker Suzanne Kinnaird said most of her clients continued to hunker down apart from a few traders, and it was difficult getting a handle on appropriate pricing for local stocks.
"There's so much forced selling by fund managers and hedge funds and things like that which mean that some of the falls we're seeing aren't really related to what the companies themselves are doing. The world won't come to an end, but it might change, resulting in a few ongoing repercussions that we can't foresee."
On the foreign exchange market, the New Zealand dollar recovered somewhat from the US53.52c mark it touched on Monday night, its lowest point since April 2003. At 4pm yesterday, it was buying US54.38c
Growing fears of a global recession have seen increasingly risk-averse currency investors repatriate cash back into the US dollar and Japanese yen while carry traders, who borrow in low-yielding currencies like the yen to invest in high yielders like the kiwi, have also been rapidly unwinding these positions.
Royal Bank of Canada currency strategist Sue Trinh expected the kiwi to retest its recent low over coming days. A move below the US50c mark was on the cards. "If it's not by the end of this week, it will be over the next several weeks."
NZX HAS STAKE IN TAKEOVER TARGET
The Bond Exchange of South Africa (BESA), in which NZX has a 22 per cent stake, is the target of an unsolicited takeover offer from the Johannesburg Stock Exchange.
The takeover offer was at a 23 per cent premium to the valuation at which NZX acquired its shares on October 6, NZX said yesterday.
The BESA board would consider the takeover offer after receiving independent financial advice on the merits and rationale of the offer.
The Johannesburg exchange had 30 days to provide a detailed offer to shareholders, after which the board of BESA would have 14 days to respond.
- NZPA
