The NZX is more than 20 percent lower than its January. Photo: RNZ / Angus Dreaver
The New Zealand stock market is a bear market, after dropping 21.2 percent from its peak in early 2021.
The NZX opened on Tuesday at 10,742 points. compared with its peak of 13,644 on 8 January 2021.
Salt Funds Management's global outlook indicated equities were struggling to adjust to a substantial rise in real bond yields, with the New Zealand market hit somewhat harder - dropping by 5.2 percent in the September quarter.
Managing director Matthew Goodson said the local market was well down from its 2021 peak, despite being weighted with less-risky companies such as telecommunications and energy sector operators.
"So you'd expect to fall by less than a bear market," he said. "What I think it reflects is we don't have any stocks that have benefited from... anything to do with artificial intelligence."
He said the companies known as the magnificent seven had led the growth on Wall Street, which would otherwise be flat. The seven heavyweights included Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla.
"I think that's sort of made our market look a little worse in comparison, because we just haven't had those sorts of companies in our index."
Goodson said getting inflation under control was the key to turning around market sentiment.
"What we need badly is for some lower inflation outcomes, which we'll see bond yields start to fall somewhat. That would then allow what is now relatively tight monetary policy to be eased, looking forward."
However, he said the outlook for such change was probably two to three years away.
