Shockwaves after Black Monday

Gull petrol stations, like this one in Kingsland, dropped the price of petrol 10c yesterday. Photo / Jason Oxenham

Chinese sharemarket tumble sparks fears of hard economic landing ahead ... but also brings petrol price drop.

New Zealand experts surveying the fallout from China's "Black Monday" stock market tumble will look to see if it reflects bigger problems in that country's economy, which is a big buyer of our exports and a source of tourists.

A dive in Chinese sharemarkets sparked drops in markets around the world on Monday, wiping off trillions of dollars in shareholder value.

Oil prices also fell to fresh lows at the start of the week, which should mean cheaper petrol prices for New Zealand motorists. Yesterday, Gull offered a one-day discount, dropping the price of Regular 91 to $1.84 alitre.

New Zealand's sharemarket index, the NZX 50, dropped 2.49 per cent on Monday, but recovered slightly yesterday.

The New Zealand dollar also bounced yesterday from a six-year low, rising to US64.99c at 5pm, having briefly slumped as low as US62.44c.

Some KiwiSaver funds will be exposed to falling overseas markets, but one analyst said investors should not make "knee-jerk changes based on a little bit of volatility".

Tim Murphy, of analysts Morningstar Australasia, said any KiwiSaver fund with exposure to overseas markets was likely to have suffered some short-term losses.

But he said fluctuations in the sharemarket were part and parcel of being an investor.

ASB Bank chief economist Nick Tuffley said the concern for New Zealand was whether there was "any fire behind the smoke" in China's stock-market fall.

"The issue is whether there is something more substantial in the background happening with the Chinese economy that the sharemarkets are reflecting or is this more about an overheated sharemarket that's coming back to earth and is that more about where that market's been and less about the economy," Mr Tuffley said.

China is a major destination for New Zealand exports, such as dairy, meat and wood. Therefore, if the Chinese economy and income growth slow,, there is likely to be less demand for New Zealand goods.

China also provides a strong stream of visitors to New Zealand and is our second-biggest tourism market.

Hamilton Hindin Greene director Grant Williamson said any slowdown in the Chinese economy had a "knock-on effect to pretty much everywhere else around the world".

"It's not so much the Chinese sharemarket, it really is their economy ... what this recent decline in their sharemarket has done is just shown that their economy does have a few stress points in it," Mr Williamson said.

Official numbers show the Chinese economy grew 7 per cent from January through March from a year earlier. Yet there is growing suspicion that Beijing's statistics are failing to capture the extent of the slowdown.

Black Monday fallout

• The New Zealand market sank almost 2.5 per cent on Monday, though closed slightly up yesterday.
• New Zealand dollar hit a six-year low.
• Oil prices to fresh six-year lows, which should mean cheaper petrol for motorists.
• Expected to hit some KiwiSaver funds in the short-term.