NZ shares sink; rising rates sap demand for yield stocks

The S&P/NZX 50 Index fell 217.7 points, or 2 percent, to 10,924.88. Within the index, 36 stocks dropped, nine rose, and five were unchanged. Turnover was $176.6 million.

The local market was the worst performer across Asia-Pacific as bond yields followed US Treasuries higher. New Zealand's 10-year swap rate at 1.37 percent has climbed almost 20 basis points this month. Low interest rates have underpinned the NZX50's high proportion of yield stocks, such as utilities and property investors, and they were among the hardest hit in today's sell-off.

Meridian led the market lower, down 5.1 percent at $5.08 on a volume of 2.2 million shares, more than its 90-day average of 1.4 million. Spark dropped 4.8 percent to $4.425 on a volume of 4.3 million shares, Z Energy fell 4.4 percent to $6.30 with 1.5 million shares changing hands, Mercury NZ declined 3.8 percent to $5.33 on a volume of one million and Contact Energy was down 3.7 percent at $8.45 with one million shares traded.

"We've seen that dramatic drop in yields rebound a little bit and that's part of the reason why our market is getting sold off," said Peter McIntyre, an investment advisor at Craigs Investment Partners. "It suggests we are seeing a bit of offshore selling in our market."