13 Mar 2013

NZ stock market drops after record close

1:14 pm on 13 March 2013

The stock market declined on Wednesday, snapping a recent rally that hit record highs.

US stock markets had a mixed day, with the S&P 500 index edging down to break seven successive sessions of gains, while the Dow Jones eked out the tiniest of gains to finish at another all-time closing high.

New Zealand's stock market has benefited from low interest rates, higher inflows of Kiwisaver funds and recent and forthcoming listings, propelling the benchmark NZX50 index to close at a new all time high of 4378 yesterday.

It fell about a third of a percent on Wednesday morning, and the head of institutional equities at First NZ Capital, James Lee, says that was mainly due to New Zealand firms going ex-dividend.

He says the New Zealand market gave back some sizable dividends on Wednesday so on a net basis it is not as weak as is appears.

Mr Lee says people have been looking for alternatives to bank desposits and the New Zealand market still provides an attractive yield.

The NZX50 has gained about 7.5% so far this year.