A2, Synlait drop more than 20% from recent highs, dragging index lower
By Sophie Boot
Nov. 8 (BusinessDesk) - A2 Milk Co and Synlait Milk are coming in for a correction with both stocks down more than 20 percent from recent peaks, dragging the S&P/NZX50 Index lower.
Around 11.15am today, A2 sank 9.5 percent to $6.90, while Synlait had dropped 11 percent to $6.45. The benchmark index had fallen 0.9 percent to 7,977.72, the first time the NZX50's been below 8,000 in more than a month. The two stocks began falling on Friday, with A2 having dropped 18 percent since then and Synlait down 19 percent.
Grant Williamson, a director at brokerage Hamilton Hindin Greene, said both stocks were seeing a good size correction "which was always going to happen" after their rapid gains this year. A2 is still up 260 percent year to date, while Synlait has gained 133 percent.
A2 has declined 21 percent from its record $8.75 on Oct. 30, while Synlait has fallen 22 percent from its record $8.24 the same day. A2's rapid ascent made it one of the largest stocks on the local index, and its losses today puts "quite a weight" on the benchmark index, Williamson said.
"Synlait is very much just following A2, they're joined at the hip to some extent," Williamson said. "In these stocks, you get a bit of selling and it's followed by more selling - it doesn't take much. It's difficult to know where it's going to bottom out."
Williamson said high volumes through A2 showed the selling wasn't limited to retail investors, but also included large institutions, and volumes would increase when the Australian share market opens at midday New Zealand time.