NZ's 1987 Crash: A Legacy of Debt and Distrust

The global sharemarket crash of 1987 was a major event, but its impact on New Zealand's economy and investors was particularly severe. In contrast to the US, UK, and Japan, where markets fell by 20.5%, 35.9%, and 25.2% respectively, New Zealand's market plummeted by 57.2%.

The country's financial history was marked by a period of deregulation in the 1980s, which led to a wave of speculation and easy credit. This fueled a sharp rise in the sharemarket, with the benchmark index increasing by almost 500% over five years.

However, when global markets crashed in October 1987, New Zealand's economy was already vulnerable due to its high level of debt and leverage. The crash led to a recession in late 1987, with dozens of listed companies disappearing in the following years.