New Zealand Stocks Fall 12% in 2022 with Chinese Contagion

New Zealand’s benchmark stock market the NZ50 fell 65.21 points or 0.57% on the last trading day of the year to finish at 11,473.24, with a loss of 12% for 2022. The mood of the market was in tune with global markets hit by soaring inflation, and aggressive monetary tightening from the Reserve Bank of New Zealand. The RBNZ raised its Official Cash Rate by another 75 bps to 4.25% at its last meeting, the highest since January 2009. The RBNZ says its committee debated a +75 or +100bp hike. The New Zealand government and the RBNZ recently projected a recession in the Kiwi economy in 2023,

The NZ50 is struggling to get back over the 38.2% zone after bouncing in June

The RBNZ was the first central bank in a developed money market to raise its cash rate above the neutral level. The bank’s committee members agreed monetary conditions needed to continue to tighten until inflation back in target range. The RBNZ saw the terminal official cash rate at 5.5% in December 2023 (previously at 4.1%).

The latest economic data showed that New Zealand business sentiment and consumer confidence slumped to record lows. New Zealand Prime Minister Jacinda Ardern popularity has plummeted and faces a battle to win a third term in 2023. Local media said Ardern will pare back its policy agenda to focus on the economy. The imploding Chinese economy is concern for NZ companies as it is New Zealand’s largest export market.

USDNZD held the weekly sphere of support twice

The New Zealand dollar has recovered after a vicious double bottom held and has been tracking the Australian dollar higher. New Zealand’s economy is also reliant on Australia’s economic strength and the cross pollination of Australin ownership in the New Zealand stock market.

How Global Indices Fared in 2022

Asia Pacific Region Equity Markets in 2022

Source: TC

From the Traders Community Research Desk