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NZX on-market trading recovers in June with more lower value activity

Wednesday 3rd July 2019

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The value of share trading through the formal stock exchange recovered in June, with increased activity albeit on a smaller turnover. 

The number of share transactions on the NZX climbed to 394,232 in June, 33 percent more than the same month a year earlier, with 62.9 percent of the value traded done on-market. That's up from 52.8 percent in May. The total value traded shrank 19 percent to $2.63 billion and the average on-market trade was 30 percent smaller at $4,216.

The stock market operator has changed the rules and introduced a new pricing regime to encourage greater liquidity and shift more activity on to the formal market in an effort to improve price transparency and make the broader capital markets more attractive. 

The volume of total cash trading - including debt - rose 33 percent to 396,626, while the value was down 18 percent at $2.74 billion. The daily average turnover fell to $144 million, down 14 percent from June last year, and was down from $155 million in May. 

The debt market was quieter in the month, with a 6.2 percent decline in the number of transactions to 2,394 and a 2.2 percent dip in value traded to $117 million. 

NZX's stock market has been a favourite among investors this year, with a large number of utilities, infrastructure companies, and property firms - which typically offer reliable dividends - an attraction in a low interest rate environment. The S&P/NZX 50 Index has been trading near a record. On a forward price-to-earnings ratio of 23.31 times, it is the most expensive market among Asian benchmarks tracked by Refinitiv. 

Total trading in the year-to-date was up 15 percent at about 1.87 million at a value of $18.35 billion, about 9.7 percent lower than the year earlier. About 51.5 percent of total trading has been on-market in the first six months of 2019. 

NZX has also been attempting to encourage more companies to go public. After a two-year drought, it registered its first initial public offering last month when medicinal cannabis research firm Cannasouth raised $10 million. It's poised for another listing in August when Napier Port offers shares. 

The stock market listed $48 million of new capital in June, of which $41 million was equity and $7 million was funds. That takes the year-to-date total to $4.05 billion, largely in retail and wholesale debt, which has been a cheap funding source. 

Some $1.81 billion of secondary capital across 172 events was raised in June, taking the year-to-date capital raised to $3.65 billion in 757 transactions. 

There were 132 equity securities as at June 30, down 7 percent from a year earlier. Fund securities rose 25 percent to 45, and accounted for 150 events to raise secondary capital in June. Retail debt securities were up 11 percent at 134. Five wholesale debt securities, and five other securities, such as tradeable rights and warrants, took total securities to 321, up 6.6 percent. 

The market value was $185.96 billion, or 62.8 percent of gross domestic product. 

Derivatives activity also increased, with an 11 percent increase in total futures lots traded to 29,241 and a 43 percent jump in options lots to 10,460. 

NZX's SuperLife unit increased funds under management by 14 percent to $2.38 billion, while Smartshares grew 19 percent to $2.99 billion. Its wealth technologies division boosted funds under administration by 86 percent to $2.11 billion. 

NZX shares slipped 0.9 percent to $1.11 in early trading. 


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