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Equity trading jumps in NZX cash market as NZX 50 nears 5-year high

Wednesday 5th December 2012

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Share trading on the NZX jumped by more than a fifth in November, a month that saw the benchmark NZX 50 Index rally to near its highest level in five years, helped by KiwiSaver contributions and offshore demand for higher yields.

Total trades on NZX's cash markets climbed 21 percent to 80,894 last month from a year earlier to $3 billion, or an average $138 million a day. Trading in equities jumped 24 percent to 77,938, while trading in debt securities fell 21 percent to 2,956. The value of debt trading fell 47 percent to $84 million.

The value of equities on the NZX rose about 20 percent to $65.9 billion, or 32 percent of gross domestic product in November. The market capitalisation of debt securities fell 5.1 percent to $14.7 billion, or 7.1 percent of GDP.

Demand for New Zealand equities has been growing as a world with near record low interest rates make the dividend yield available on local stocks more attractive. For example, Telecom is trading at a dividend yield of almost 13 percent and Goodman Property Trust is at 8.3 percent. By contrast, 2-year term deposits in New Zealand offer around 4.35 percent. US 10-year Treasuries are yielding 1.61 percent.

The NZX 50 Index closed yesterday at 4015.694, slipping for a second day from the highest level since December 2007.

Total equity securities listed on the NZX fell 0.6 percent from a year earlier to 169 and debt securities fell 8.5m percent to 97. There was $166 of equity capital raised last month, of which $36 million was for dual-listed or secondary listed companies. There was $59 million of debt raised.

Shares of NZX last traded at $1.21 and have gained 26 percent this year.

BusinessDesk.co.nz

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