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New Zealand stocks were shaken by China's market contortions last week, as were share markets around the world. New Zealand's NZX-50 Index ended Wednesday's session 62.30 points, or 1.5 per cent, down at 4037.13 - its biggest one-day percentage fall since May 2, 2003. The index had fallen by as much as 3.3 per cent at one point in response to the Shanghai Composite Index's 8.84 per cent decline, which was its biggest fall in a decade. Although concern that the Chinese government wanted to cool the market helped to trigger the week's tumble, analysts and fund managers believe the Chinese authorities, who plan to list a string of big firms this year, would not permit a market collapse.
The sell-off in Chinese stocks helped set off a global trend and fanned concerns about a slowdown in world economic growth. The consensus among New Zealand brokers is that the local market was more in correction mode than in crisis. "A number of brokers around town have said some of our valuations are stretched, and the reporting season was average at best, so we, as a market, were probably due a bit of a breather," UBS managing director Campbell Stuart said. "The market's up quite a long way... so it's just one of those periods where we're going to see a bit of volatility. I think we're likely to see a few more weak days."
By the end of the week, the market had recouped its losses, the NZX-50 rising 49.85 points, 1.23 per cent, to finish at 4098.69.
