COVID-19 restrictions and increasing interest rates see NZ shares in worst position since 2008

COVID-19 restrictions, increasing interest rates and Omicron are being blamed as the New Zealand share market experiences its worst performance since the Global Financial crisis. 

The NZ50 Index is down by five percent this year- the worst since 2008. 

Milford Asset Management Portfolio Manager Frances Sweetman told AM it could be a lacklustre year for investors.

"So we've got a long year yet to go but it hasn't been a great start for investors," she said on Thursday. 

Sweetman said the market is experiencing "real volatility" off the back of uncertainty caused by the pandemic. 

"Companies are facing a lot of headwinds at the moment. We've got rising interest rates - which is the big one for share markets - that should slow the economic environment and slow spending. We've got a tough housing market and an Omicron outbreak so it's a tough list."

She said there is a wide spread in share price performance with Air New Zealand rising nine percent while Ryman Healthcare is down around 20 percent. 

But companies that have speciality services and rely less on the housing market could still do well this year, Sweetman said. 

"We still have quite a buoyant economy, we are coming off that boom from last year. So there are some New Zealand companies that should deliver really well but it really depends on what we get over the next six months." 

It comes after inflation saw its biggest increase in 31 years - up a whopping 5.9 percent last year. 

It marks the biggest annual rise since the June 1990 quarter, when annual inflation reached 7.6 percent. 

Housing and household utilities, and transport were the biggest drivers of annual price rises. Construction prices were up 16 percent annually, rental prices were up 3.8 percent and petrol prices were up 30 percent. 

The jump is putting pressure on Kiwis' wallets with people telling Newshub their grocery shop is getting more expensive. 

"My weekly pay is not even enough to fill my car or my cupboards," one person said.

"Sometimes you can't afford to buy a bottle of milk, it's a bit all over the place to be honest," another said.

"The price of petrol is the biggest one that I notice," one man said.