NZX falls 4.9 per cent in a tough day

Billions of dollars were wiped off the New Zealand sharemarket yesterday after markets overseas saw their biggest daily falls since 1987.

At one point, the NZX-top 50 was down more than 8 per cent, but it recovered slightly to close down 4.9 per cent, or 506 points, at 9826. It entered bear market territory during the day – a 20 per cent loss in value – but ended down 18 per cent.

The coronavirus pandemic panic sent international sharemarkets sliding after United States President Donald Trump banned flights from continental Europe to American airports.

The week has seen a rush of thousands of KiwiSaver holders switching to funds with lower exposures to shares in a bid to avoid further losses, though KiwiSaver managers warn they are likely to miss the market recovery, when it comes.

Up to $7 billion was wiped off the market during the day, said Grant Davies, of Hamilton Hindin Greene.

‘‘The New Zealand market had a pretty bad day,’’ he said.

‘‘Clearly, at the moment, investors are a little bit worried about repercussions of the current systems they’re putting in place to deal with the virus.

‘‘Everyone’s trying to frantically run some numbers around the impact on company earnings, and that’s not an easy thing to do.’’

There was plenty of selling with shares trading heavily – volume was up about 60 per cent on an average day, he said.

Tourism-related stocks were among those to take a hammering.

Auckland Airport shares tumbled after it issued a revised earning outlook, then recovered some ground. They closed down 7.8 per cent at $6.60.

‘‘That’s just an example for people to be valuing these companies at the moment,’’ said Davies.

‘‘A company like Auckland Airport, who in the long run, their earnings are clearly predictable, but having an intraday swing of 10 per cent for a company that size isn’t something I’ve seen before personally.’’

The airport’s shares were put on trading halt on Thursday, and yesterday morning it said developments in the outbreak of coronavirus and significant market uncertainty had caused it to revise its underlying earnings guidance for the year to June 30 from an original range of between $260 million and $270m, down to between $210m and $235m.

Tourism Holdings also fell, down 16.7 per cent to $1.95, after it said it had reviewed its forecast of about $24m annual net profit after tax in light of the Covid-19 pandemic.

‘‘While we believe this [$24m] remains a possibility, there are too many uncertainties for this to remain as THL’s guidance,’’ the company said in a note to the NZX.

‘‘As a result, we do not expect to provide financial guidance for the remainder of the FY20 year.’’

Air New Zealand shares were down 12.5 per cent at $1.54.

A2, which has strong ties to China, was up 1.8 per cent at $15.30, buoyed in the wake of solid financial results last month.

Offshore, Australia’s benchmark S&P/ASX 200 Index turned around earlier heavy losses to be up 2.2 per cent at 5422.

On Wall Street, the S&P 500 plummeted 9.5 per cent, and the Dow Jones Industrial Average sank 10 per cent, its heaviest loss since its nearly 23 per cent drop on October 19, 1987. The sell-off has now wiped out most of Wall Street’s big gains since Trump took office.

The week has seen a rush of thousands of KiwiSaver holders switching to funds with lower exposures.