Sharemarket drop below 10,000; A2 slumps on China fears

The NZX50 dropped 166.06 points, or 1.6 percent, to 9,951.93. Within the index, 30 stocks fell, 16 rose, and four were unchanged. Turnover was $143.3 million, of which A2 accounted for $38.5 million.

The local market was already poised for a weak session after Australia's S&P/ASX 200 Index opened the winter quarter on the back foot, falling 1.3 percent yesterday. The Australian market clawed back some of that loss, and was up 0.3 percent in afternoon trading, with bank stocks getting a boost from the Reserve Bank of Australia meeting expectations when it cut the target cash rate a quarter-point to 1.25 percent.

That wasn't enough to smooth the domestic decline, with A2 weighing on the broader market, given its heavy weighting on the index. A2 dropped $1.71 to $14.09 on a volume of 2.7 million, more than three times its 90-day average of 780,000 shares. Synlait Milk, which supplies A2, fell 2.5 percent to $8.65.

"That's on the back of the Chinese government on Monday releasing an action plan on the improved quality of its domestically-made baby formula and increasing its market share to above 50 percent," said Peter McIntyre, an investment adviser at Craigs Investment Partners. "That's really had an impact on A2."