By Suze Metherell
New Zealand stocks have booked their worst quarter since June 2012, as a drop in global commodity prices and fears about emerging economies weighed on equities.
The NZX 50 Index declined 3.5 percent in the three months to September 30, adding to the June quarter's 1.9 percent decline, when it snapped 11 consecutive months of quarterly gains.
"Things don't go up in a straight line for ever and a day, and you'd have to say we've had a very impressive performance on the local market for a longer period of time," said Grant Williamson, director at Hamilton Hindin Greene.
"We're now going through one of those difficult periods that see investors give a little bit back."
Trading in the quarter was marked by volatile markets, with the VIX Index, known as Wall Street's "fear gauge", climbing to a four-ear high in August, as a large correction in Chinese equities spooked global markets, already concerned the world's second biggest economy was slowing.
Falling commodity prices, particularly iron ore and oil, affected equity markets too.
"It's been a pretty rocky period for international markets, so you have to say that the NZX did relatively well," said Brian Gaynor, executive director at Milford Asset Management.
"Our market did much better than other markets in the quarter, and it's mainly to do with the mix. We've got more conservative, defensive companies, whereas in other countries they have bigger exposure to mining stocks and energy companies."
Mr Gaynor points to the 9.3 percent drop for MSCI World Index, which tracks developed countries' markets including New Zealand, and a 20 percent slide in MSCI Emerging Markets Index.
"It's wider than just China, it's emerging economies," like Russia, Brazil and African nations, Mr Gaynor said.
"Unlike most of those countries, China is not an exporter of commodity products but is an importer. A lot of the other countries are exporters of commodity products, and commodity prices have fallen, so it is wider than just China.
"We've got a two-fold world at the moment. We've got the emerging countries really struggling, but we've got the United States doing particularly well and Europe picking up quite strongly."