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NZ share market trading perks up in February's earnings season

Tuesday 5th March 2019

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Share trading on New Zealand's stock market perked up in February as a glut of company earnings and an index re-weighting gave investors something to mull over. 

Total equity trades on the NZX rose 11 percent to 248,853 in February from a year earlier, and were up from 203,707 in January, the stock market operator's monthly metrics show. While trading was busier, the value of trading on and off market fell 4.1 percent to $2.94 billion from a year earlier, though still up from the $2.33 billion in January when trading was in summer holiday mode. 

NZX has put a greater emphasis on driving trading through the formal market, with new listing rules and an updated fee restructure designed to encourage on-market activity. The value of equity trades on-market in February was 47.9 percent of total trades, up 2.5 percent from a year earlier, but down from 49.7 percent in January. 

The stock market operator is working with its regulator, the Financial Markets Authority, in driving a new review of the capital markets in an effort to address the declining number of equity listings. The steering committee was announced yesterday and is expected to file a report in the September quarter of this year. 

Local equity listings are set to shrink further before they improve, with tapmaker Methven and online marketplace Trade Me holding special meetings this month on whether to approve separate takeovers.

Meanwhile, initial public offerings have been few and far between since the previous administration's mixed ownership model spurred a number of floats, although Hawke's Bay Regional Council's partial privatisation of Napier Port is seen as a strong contender to follow through on plans to go public and Vodafone New Zealand is preparing itself for listing next year under new chief executive Jason Paris. 

NZX had 136 listed equity securities at the end of February, down 4.9 percent from a year earlier. Debt securities were up 18 percent at 133 and fund securities rose 2.8 percent to 37. There were six other types of security listed on the NZX. 

Despite the closing gap between the number of listed debt and equity securities, stocks continue to dominate trading. Debt transactions edged up 0.2 percent to 2,330 last month from February 2018, and down from 2,467 in January. The $67 million traded was almost 40 percent lower than a year earlier, and down from the $80 million traded in January. 

Total cash trades rose 11 percent to 251,183, an average of 13,220 a day. The value traded of $3.01 billion, or $158 million a day, was 5.3 percent lower than a year earlier, and of that 47.6 percent was on-market.

In the year-to-date, the number of trades was up 3.4 percent at 457,357 from the first two months of 2018, although the value traded was 8.5 percent lower at $5.42 billion. The value of on-market trading amounted to 48.6 percent. 

Despite the lack of new IPOs, the capital markets have offered existing issuers ample opportunity to raise capital. Some $763 million was raised in February, more than twice the amount raised a year earlier, of which $100 million was via a new debt listing.

The other $663 million of capital raised in the secondary market was across 64 events, with $379 million of new equity from local issuers, $10 million from local funds issuers, $75 million from dual or foreign fund issuers, and $199 million in debt. 

NZX's derivatives market continued to expand, with futures lots traded rising 22 percent to 21,260 in February from a year earlier. Options lots traded fell 30 percent to 2,000. Total derivatives trading was up 15 percent at 23,260. 

Wholesale data terminal numbers for professionals were up 3.2 percent at 6,250 while retail numbers increased 6.2 percent to 1,270, while dairy data subscriptions rose 8 percent to 968. 

NZX's SuperLife funds management business lifted total funds under management 10 percent to $2.22 billion, while Smartshares funds swelled 20 percent to $2.67 billion.

The wealth technologies unit lifted funds under administration 80 percent to $2.07 billion from a year earlier. Craigs Investment Partners signed up to the combined registry, administration and custodial service in November and shifting $950 million of its $16 billion under management on to the platform. 

NZX shares last traded at $1, and have declined 6.5 percent over the past 12 months. 

(BusinessDesk)

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