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New Zealand shares fall as mainland Chinese markets reopen

New Zealand shares fall as mainland Chinese markets reopen

New Zealand shares fell as the coronavirus outbreak continued to weigh on investor confidence, however, it weathered a savage reopening to Chinese equity markets as a weaker kiwi dollar buoyed exporters.

The S&P/NZX 50 Index declined 167.28 points, or 1.4 per cent, to 11,550.16. Within the index, 43 stocks fell, five rose, and two were unchanged. Turnover was $106.7 million,

Chinese stocks took their steepest dive since 2015 as they resumed trading from the Lunar New Year holiday, missing out on earlier reactions to the growing fears permeating among equity investors about the outbreak of coronavirus. The Shanghai Shenzhen CSI 300 Index fell 8.2 per cent in early trading.

Michael McCarthy, chief market strategist at CMC Markets, said there was a lot of pressure on equity markets across the region and New Zealand was not immune to the global downdraft.

“This is a response to the nervous reaction we saw on Friday night in European and US markets, most growth exposed markets were hit. Oil came off again and base metals came off, which supports the idea that the big concern for investors is the impact on global growth.”

Tourism Holdings led the local market lower, sinking 6.4 per cent to $2.80 on a volume of 269,000 shares. Among other travel and tourism stocks, Auckland International Airport fell 2.9 per cent to $8.40 on a volume of 1 million shares, Air New Zealand fell 2.8 per cent to $2.74 on a volume of 1 million shares and SkyCity Entertainment fell 1.9 per cent to $3.57 on a volume of 954,000 shares.

Yesterday, the New Zealand government announced it was restricting entry into the country from foreign nationals arriving from mainland China, following similar moves by the US, Australia and Japan.

Fat Prophets head of research Greg Smith said the travel restrictions triggered fears of a ripple effect across the wider economy.

“It’s a response that was needed, but we are tourism-centric, so it has a direct impact on GDP, which the market has taken on the chin,” Smith said.

“We are pretty heavily reliant on China, so GDP is going to be damaged this quarter.”

Global logistics firm Mainfreight fell 3.4 per cent to $40.07 on a volume 147,000 shares, Freightways fell 1.2 per cent to $8.50 on a volume of 43,000 shares, Port of Tauranga was down 2.4 per cent at $7.40 on a volume of 120,000 shares.

Last week, the country’s biggest meat exporter, Silver Fern Farms, warned of congestion at Chinese ports due to the extended holiday and restriction of movement within China.