NZ shares fall in tech sell-off

New Zealand's main share index tumbled on Tuesday, following global tech stocks lower ahead of the Reserve Bank of New Zealand’s interest rate decision on Wednesday afternoon.

Tuesday, October 5th 2021, 7:10PM

by BusinessDesk

The S&P/NZX 50 Index fell 137 points, or 1%, to 13,199.99. Turnover was $157 million.

Growth-sensitive tech shares took a battering overnight as investors sold the highly-priced equities in an effort to reduce the risk in their portfolios.

All three key US indices fell significantly overnight, with the tech-heavy Nasdaq dropping more than 2%. Asia/Pacific markets followed suit with the ASX 200 trading down 0.3%, even after its central bank left interest rates unchanged which prompted a small relief rally.

Highly valued market heavyweight, Fisher & Paykel Healthcare led the local index lower, falling 3.3% to $30.55, its lowest price since mid-July.

Kathmandu Holdings also fell more than 3%, dropping to $1.55, although remains near $1.68 – its highest price since the covid outbreak.

NZX-listed tech stocks, Vista Group International declined 2.6% to $2.60 and Pushpay Holdings fell 2.2% to $1.81.

Travel stocks continued to rally, as some parts of the world begin to open up international flights and investors predict NZ is heading slowly in the same direction.

Auckland International Airport was up 2.9% at $8.13, Tourism Holdings climbed 1.1% to $2.76, and Air NZ rose 0.3% to $1.695.

Shares in media company NZME remained unchanged at $1.01 after it told investors it expects earnings to be in the range of $63m to $67m for full year 2021. This is despite the businesses operating at a reduced level during lockdowns, which has reduced advertising revenues.

ikeGPS Group announced it had signed an extension to an agreement with a key customer which will generate approximately $1m of revenue in the next 12 months.

This didn’t keep the utility tech stock from being caught in the sell-off though, shares declined 1% to $1.02.

Internationally, government bond yields have been rising as markets anticipate further central bank tightening over the near and medium-term.

In New Zealand, market pricing for RBNZ’s rate hike was toned back as it became clear the delta outbreak would not be stamped out and covid restrictions may remain for months.

Traders are now pricing in an 80% chance of a 25 basis point rate hike on Wednesday, whereas they had priced in a reasonable chance of a 50-basis point hike when elimination was still an option.

While the government has eased some lockdown rules, those limiting economic activity the most remain in place until further notice.

“It appears the lockdown will be in place for much longer than first anticipated, potentially acting as a handbrake on what was an overheated domestic economy,” said currency exchange OFX.

The NZ dollar fell throughout September hitting a low of 68.63 US cents, however it has had some recovery during October and was trading at 69.39 cents on Tuesday evening.

OFX said the currency had maintained an “elevated level” but a modest correction was likely as the effects of the delta variant are felt across the economy.

Tags: Market Close