NZ Markets Keep Slipping Throughout Week

October 11, 2008 International FinanceNew Zealand FinanceNew Zealand Taxation  No comments

The week ending 12th of October, saw continued falls in the New Zealand Stock Exchange.

Following Black Tuesday, the New Zealand Stock Exchange (NZX) has progressively closed on a down note. The last trading day of the week, Friday the 10th of October, saw a fall of 4.724%. This trend is continued to an even greater extent in markets throughout the world. By trading close on the Friday, the Japanese market closed 7.7 % down, with drops as low as 11%, and the Australian market saw a drop of over 8%. Trading on the NZX on the Friday was characterized by the NZSX-50, which was faced with the fact that there were only 9 rises throughout the day, and 94 falls.

Locally, solutions have been proposed from many parties. Of these the idea of drastic decreases in the official cash rate, and the paper bought forward jointly by the New Zealand Institute and NZX, are receiving the most attention.

While analysts expected an upcoming interest rate fall of over 50 points, claims have come in that 100 points would be the necessary amount. Some analysts do denounce such thought, claiming that there was not enough hint of crisis in New Zealand to justify changes before the next official Reserve Bank announcement, in two weeks. Further, New Zealand was not faced with a situation which would be remedied by such drastic short-term actions, and instead would benefit from a sound long-term plan.

The other popular suggestions are those bought forward by New Zealand Institute chief executive David Skilling and NZX chief executive Mark Weldon, in their paper “Economy on the Edge: Swan Dive or Belly Flop?”. These include abolishing tax advantages for house investment, lowered temporary tax rates for returning New Zealand ex-pats, allowing provisional tax rate payments in arrears and gathering and selling partial stakes in Government owned businesses.