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NZ shares plunge after Brexit vote

NZ NewswireNZ Newswire 24/06/2016 Sophie Boot
Within the index, 44 stocks fell, four were unchanged and two rose. © Bloomberg Within the index, 44 stocks fell, four were unchanged and two rose.

New Zealand shares plunged after the UK voted to leave the European Union, taking investors by surprise with financial institutions hit hard.

The S&P/NZX 50 Index dropped 153.57 points, or 2.3 per cent, to 6,667.78. Within the index, 44 stocks fell, four were unchanged and two rose. Turnover was $132.6 million.

"The next question will be just how far down markets will go overnight, particularly since they incorrectly rallied going into this," said Matt Goodson, managing director at Salt Funds Management. "Individual stock movements have not much information. Futures are down extremely sharply, and the difficulty is our market has been trading at expensive levels."

Xero led the index down, falling 8.1 per cent. Research house Morningstar said that the accounting software developer would start turning profits from 2020 as it continues to grow its customer base in North America and the UK..

A2 Milk, which has seen big movements of late as investor confidence has waxed and waned, fell 7.1 per cent to $1.69 and New Zealand Refining Co dropped 5.1 per cent to $2.41.

"The bright side is we are seeing quite a rally in bonds," Goodson said. "Credit spreads will move out, that's why the financial sector's been hard hit today - although the direct exposures are relatively modest."

ANZ fell 4.9 per cent to $24.33, Heartland Bank dropped 4.8 per cent to $1.20 and Westpac declined 4.5 per cent to $29.60.

"The fear was always the exit voters would be more motivated than the remain voters, and that seems to be what has happened - where they have voted leave they've voted in greater numbers than expected," Goodson said.

Ryman Healthcare dropped 1.6 per cent to $8.80. The company's board will ask shareholders to sign off on a 9 per cent pay rise for directors as they cope with an increasingly larger retirement village operator.

Outside the main index, Smiths City Group rallied 3.9 per cent to 54 cents, despite the NZX All index falling 2.2 per cent on the Brexit news. The Christchurch-based retailer reported a 30 per cent decline in annual profit while lifting sales as it overhauled its operations to exit low-margin business.

Cavalier Corp shares jumped 7.7 per cent to 70 cents after the carpet maker raised 2016 earnings guidance as its broadloom carpets unit outperformed expectations and it sold an unprofitable carpet tile operation.

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