Investors headed for the high ground of blue-chip stocks yesterday as the NZX staged a solid recovery a day after the Chinese market slump sent shockwaves around the world.
The NZX-50 fell 1.5 per cent on Wednesday, but fared well compared with Australian and US markets which fell
about 3 per cent.
The local market closed up 0.3 per cent yesterday, despite being dragged down by its largest stock, Telecom, which shed another 9c to close at $2.73.
The telco giant aside, it was about as good a day as could have been expected, said Stephen Wright at ASB Securities. "Some of the old favourites roared ahead."
The recovery was led by Fletcher Building, which leapt up 43c to a close of $11.05, and Contact Energy, which closed up 12c at $8.98.
In times like this it was typical to see a flight to quality, Wright said.
"One day doesn't make a trend but things have changed a little bit and there is more caution out there."
It was a steady recovery, although there was definitely still nervousness, said Macquarie Equities investment director Arthur Lim.
But bargain hunters - who were still waiting for US market signals on Wednesday - started to get into the market yesterday, he said.
"America seems to have settled down and Asian markets, while still a bit mixed, weren't as bad as the day before.
"So that has resulted in some investors taking the opportunity. And some stocks, the blue chips in particular, were getting picked over."
Mark Lister at ABN Amro Craigs said the situation hadn't been as bad as Wednesday's panic suggested.
"The key thing is that none of it was driven by any economic fundamentals being well out of whack. Nothing's changed in terms of earnings potential, GDP growth since Wednesday."
Some other stocks to benefit from the recovery were Guinness Peat Group, up 3c to $2.41c, Vector, up 2c at $2.72 and SkyCity, hammered on Wednesday, back up 8c to $4.93.
Across the Tasman the Australian market remained jittery, closing down -22.3 to 5810.2.
