Global selloff pushes NZ shares lower

Spark shares were up 0.5 per cent yesterday to $3.035. Photo / Greg Bowker

NZX 50 Index falls 2.5% with every stock down except Spark, as weak Chinese data saps appetite for risk.

New Zealand shares dropped yesterday in a global selloff after weak Chinese manufacturing data added to concern about the world's second-largest economy and sapped risk appetite. Xero plunged to its lowest level in two years, while a weak earnings result saw Chorus hammered.

The S&P/NZX 50 Index declined 143.87 points, or 2.5 per cent, to 5607.32 - its lowest level since January. Within the index, every stock bar Spark New Zealand dropped. Turnover was above average at $190 million.

Negative investor sentiment was triggered last week by the release in China of the Purchasing Managers' Index from Caixin Media and Markit Economics, which fell to 47.1 in August, from 47.8 in July and below the median estimate of 48.2 in a Bloomberg survey.

China is New Zealand's biggest trading partner and the largest export market for Australia's raw materials.

"It's one of those things - stocks go up in escalators and come down in elevators," said James Smalley, director at Hamilton Hindin Greene. "The question is now is the People's Bank of China going to start pulling the trigger on stimulus?"

Momentum stocks dropped, led by Xero, the cloud-based accounting software firm, down 8.1 per cent to $13.80. A2 Milk declined 5.5 per cent to 69c. Pacific Edge, the biotech firm, fell 3.3 per cent to 59c.

"There's no anchor or earnings to link the share price or support it, it all just comes down to perception," Smalley said. "In an environment like this, where everyone is unbelievably, overly negative ... then those are the stocks that are a lot more susceptible to negative sentiment. Once sentiment really gets hold that can last quite a long time."

Spark New Zealand rose 0.5 per cent to $3.035, as investors flocked to the telecommunication provider, which produced an unexpectedly strong dividend forecast at last week's profit announcement.

Property investors and other defensive stocks fell to a lesser degree, Smalley said. DNZ Property Fund slipped 0.5 per cent to $2.15. Z Energy declined 0.4 per cent to $5.75. Property For Industry fell 1 per cent to $1.52. Precinct Properties New Zealand retreated 0.9 per cent to $1.155.

Chorus shares fell 4.6 per cent to a 6-month low of $2.625 after the telecommunications network operator reported a 39 per cent decline in annual profit to $91 million as the lower regulated price for its copper-based services generated weaker revenue. Weaker earnings are expected in the 2016 financial year.

Auckland International Airport declined 4.2 per cent to $4.99. The country's biggest gateway beat its own guidance with a 3.8 per cent gain in underlying annual earnings and said profit on that measure might rise as much as 8.3 per cent in 2016. Underlying profit, which excludes some revaluations of property and derivatives, rose to $176.4 million in the 12 months ended June 30, from $169.9 million a year earlier, while sales rose 6.9 per cent to $508.5 million.

On the New Zealand Alternative Index, GeoOp rose 4.7 per cent to 45c after it said it would raise $2.4 million in a private placement to foreign investors, senior management and the board to help fund expansion in Australia.