New Zealand's sharemarket may have weathered the recent storm of sell-offs better than other larger bourses, but global economic uncertainty still prevails, heading into the new year.
As China's economy softens further, that "backstop" may wane soon and not be supporting global growth as it has been, Craigs Investment Partners head of research Mark Lister said
Global shares are down almost 15% from their peak, way back in January of this year, while the NZX 50 was down just 7%, Mr Lister said.
"Some markets have fared worse than others, such as China and emerging markets, both down around 25%."
The US S&P 500 was 11.3% lower.
Mr Lister said the reason for the downturns was not the rising US interest rates, nor political Brexit drama unfolding in the UK, or even the tariff trade spat between the US and China.
"Over the last several years we've seen plenty of similar issues and markets have sailed through them," he said.
Explaining the recent share sell-off, Mr Lister said in tougher economic trading conditions, investors would be factoring in less product being sold, falling margins and lower profits in companies they held shares in.
"As this picture starts to look less rosy, the share price adjusts accordingly ... hence the sell-off we're in the middle of," he said.
He noted Brexit and US rates were "part of the puzzle" and that the rising US interest rates "could eventually choke off activity".
The Brexit uncertainty was troubling many UK businesses and higher US-China tariffs would lead to higher costs and supply chain disruption.
However, Mr Lister said the problem was economic growth, which was showing clear signs of slowing and rising concern over just how dramatically it will taper off.
"It`s difficult to see what might turn the negative sentiment around," he said.
The markets and investors needed something other than the US Federal Reserve telling people it would "tread more carefully" or US President Donald Trump tweeting something positive about trade.
"What we really need is evidence that global economic growth is stabilising," Mr Lister said.
China, the world's second-largest economy after the US, was probably the biggest area of concern.
Steady Chinese growth, much of it driven by government stimulus, had supported global growth for some time now, Mr Lister said.
"However, that backstop might no longer be there during the next year or two, at least not to the same degree."
Industrial production growth in China fell in November to the slowest in almost three years and retail sales growth also fell, amid weak car sales.
Elsewhere around the world large economies were either softening, chalking up their slowest growth in years or had experienced declines in their exports.
While the US was "still chugging along nicely", numerous companies there had reported a softening outlook and the housing market had lost some steam as higher mortgage rates started to bite, he said.
This month Europe reported the slowest growth in business activity in more than four years, as job creation slipped to a two-year low.
"Meanwhile, Japan has seen exports decline by the most in over two years, while business confidence have been declining for several months," he said.
