Myer shares drop 5% on first day of trade as sharemarket dives

Shares in department store chain Myer have fallen sharply just moments after listing on the Australian Securities Exchange on what looks like being a horror day for the wider market.

Myer shares, which were priced at $4.10, opened at $3.88, a discount of 5.3%. The shares are likely to come under further pressure during the course of the day, as nervous investors back away from the market.

The Australian sharemarket was down by as much as 2.7% in morning trade following a horror night on Wall Street on Friday, when stocks fell to the lowest level since July on worries about Citibank and the overall US economic recovery.

The benchmark S&P/ASX200 index was down 92.2 points or 2% to 4551 at 12.10 AEST. The Australian dollar was also down to US89c.

ANZ shares fell 2.4% to $22.50, while NAB shares also dropped 3.6% to $28.79. Westpac fell 2.7% to $25.66, as Commonwealth Bank shares also dropped 2.9% to $50.73.

The $2.2 billion Myer float is seen as a bellwether by several companies hoping to list on the ASX in the coming months. These include retailer Kathmandu, which will also float before the end of the year.

While Myer’s executives might be disappointed with the initial listing price, they do appear to have got a handsome return from the float, given private equity firms TPG and Blum Capital bought Myer for $1.4 billion three-and-a-half years ago.