NZ stock market finishes first half of 2022 down 18%

New Zealand shares generally fell on the last trading day of the first half of 2022 and the benchmark equity index closed down more than 18% in the past six months.

Friday, July 1st 2022, 6:14PM

by BusinessDesk

The S&P/NZX 50 Index fell 115 points, or 1.1%, to 10,753.16. Turnover was light with just $95 million traded.

Many equity markets have seen double-digit falls in the second quarter as global interest rates have moved up dramatically.

“A turbulent second quarter is about to be wrapped up and market participants will be glad to see the back of it,” said Jason Wong, a BNZ interest rate strategist.

The S&P 500 index in the United States has fallen more than 20% over the year to date, making it the worst first half since 1970. Meanwhile, the tech-heavy Nasdaq Composite is down almost 30%, which is its largest first-half drop on record.

Much of this decline has been due to central banks responding to inflation by promising to lift interest rates aggressively. This sent market interest rates soaring, but some traders are beginning to question whether rates will actually get that high.

The pressure of higher interest rates is beginning to have an impact on economic activity, and some economists think a recession could arrive before central banks complete their planned rate hikes.

This has resulted in market interest rates, such as NZ government bond yields, pulling back from the record highs they reached earlier this month.

Still, stocks are struggling to rebound with investors now worried about experiencing both inflation and recession simultaneously.

Pushpay Holdings led the NZX 50 index lower on Friday, falling 4.7% to $1.21 despite still being courted by several private equity funds looking to take over the company.

Pharmaceutical company Ebos and energy firm Mercury both fell about 3% to $37.81 and $5.48, respectively.

All three of these stocks have outperformed the market, and investors may be looking to pull some cash out to reinvest in weaker stocks, such Eroad which climbed 3.5% to $1.47 today.

Eroad has fallen more than 70% this year as investors have ditched growth stocks and been shaken by its poorly communicated leadership changes.

Air New Zealand – another hard-hit stock – climbed 2.6% to 58.5 cents and Auckland International Airport was up 1.1% at $7.26.

Tourism Holdings rose 0.9% to $2.34 after it told investors it was willing to sell off some of its assets to make its acquisition of Apollo Tourism & Leisure more palatable to the Commerce Commission.

The company said it could sell Apollo’s Star RV motorhome brand and most of its four-to-six-berth motorhomes. Australian private equity firm Next Capital, which is in the process of buying Jucy Rentals, is in negotiation to buy these assets.

Move Logistics gained 0.9% at $1.15 after it began trading on the ASX as a dual-listed stock today.

The NZ dollar was trading at 62.30 US cents at 3pm in Wellington, up from 62.13 cents yesterday. The trade-weighted index was at 70.48, from 70.34 yesterday.

BNZ’s Jason Wong said the currency ducked under 62 US cents after the release of another poor business survey yesterday, but strong China manufacturing data helped it recover.

“The ANZ business outlook survey was another weak one and, when viewed alongside a record low level of consumer confidence, was either consistent with the NZ economy being in recession, close to it, or heading that way,” Wong said in a note.

Tags: Market Close