NZX Drops More Than 3% In Worst Session Since Covid-19 Pandemic

Monday, 7 April 2025, 5:43 pm
Article: RNZ

Gyles Beckford, Business Editor

Two billion dollars has been wiped off the value of New Zealand's share market as the rout of global financial markets caused by the US tariff policy finally caught up with the local market.

The benchmark NZX-50 index opened immediately down about 1.8 percent, but in quick order slipped to its worst single session performance to about 3.6 percent, a slump not seen since the start of the Covid pandemic in mid-March 2020.

Falling shares outnumbered the gains by seven to one and the market's value slipped to about $169.5 billion from $172 billion at the end trading last week.

Hardest hit were those directly exposed to US tariffs ,including Fisher and Paykel Healthcare and Skellerup, while investment funds based on US assets, and companies with US investments or revenue from American tourists such as Air New Zealand and casino company Sky City, were also sold on the prospect of reduced demand.

Investment strategists said New Zealand could not expect to avoid being caught by the turmoil despite the local market being regarded as more domestic focused and populated with defensive companies such as power generators and real estate companies.

New Zealand dollar takes a dive

The New Zealand dollar was also taken on a rollercoaster ride, plunging nearly 2 cents since Friday to around 55.5 US cents, the lowest level this year.

BNZ senior markets strategist Jason Wong said the tariffs were possibly worse than the worst-case-scenario.

He said China's retaliatory tariffs played a big part in the Kiwi's movement, including modest and temporary gains against the Australian dollar.

"In this sort of world where there are a lot of doubts about global growth and China is at the forefront, it does tend to have a marked impact on very growth-sensitive currencies like the New Zealand dollar."

Wong said there was potential for the Kiwi to go as low as 55 cents against the greenback.

"We think at that level the New Zealand dollar is quite cheap and fundamentally undervalued, so to go beyond the 55-cent mark onto the downside, you've got to factor in more of a crisis situation."

Wong said during the global financial crisis in 2009 the New Zealand dollar fell to 49 cents, but believed the current situation was not as bad.

Cool, calm, collected

Meanwhile, investment strategists urged New Zealand investors not to be spooked by the volatility, and to think carefully before changing tack.

Nikko Asset Management NZ head of bonds and currency Fergus McDonald said current market conditions offered risk and opportunity for investors, though investors needed to be comfortable with their risk appetite and be confident in their investment horizon.

"Some people might be unsettled by financial volatility, and if so they might consider derisking ... and moving into more conservative and defensive assets like bonds."

But he said the turmoil might also offer opportunities for risk takers or people with a longer term time horizon of five years or more.

"Those people might want to increase their exposure to global equities as history has shown that usually these rise over time."

The head of investment strategy at Craigs Investment Partners, Mark Lister said investors needed to stay calm and not panic, and before making any changes should seek proper investment advice.

© Scoop Media

RNZ

New Zealand's public broadcaster, providing comprehensive NZ news and current affairs, specialist audio features and documentaries.

Radio New Zealand is a Crown entity established under the Radio New Zealand Act 1995. Radio New Zealand News are vital elements in our programming, providing impartial news and information to New Zealanders every day. Radio New Zealand (RNZ) provides listeners with exciting and independent radio programmes in accordance with the Radio New Zealand Charter.

Contact RNZ

• Website - www.radionz.co.nz
• Twitter - @rnz_news
• Facebook
• Link - Contact RNZ