NZX market rated good place to invest

Sunday 25th July 2004

The top 50 listed companies in the NZX are rated as being of reasonably good quality a researcher says.

Rapid Ratings has released its second annual ratings for all the NZX Top 50 Companies. The ratings are a comparative risk review of the top 50 companies listed on the NZ Stock Exchange.

"Overall the NZ Top 50 Index is rated as being of reasonably good quality, but keep in mind that things change," Rapid Ratings managing director and chief executive Dr Patrick Caragata says.
"For the last two years, the index has scored an investment grade rating of B3, however, this possibly understates its quality because it is a weighted rating.
"If we removed Carter Holt Harvey, which is rated well below investment grade and representing around 10% of the index, we find that lifts the index rating significantly. New Zealanders are fortunate investing in an investment grade index at the moment. If I were to compare it with another index we have rated recently, the Toronto Stock Exchange Top 60 Index, which is rated a C1- or borderline investment grade, the NZ Top 50 is certainly a safer bet."

Drilling down to individual companies, the five NZX companies with the highest rating, in rank order, are Sky Network TV, Freightways, Telecom, Auckland International Airport, and Telstra. The five NZX companies with the lowest rating, in rank order are Carter Holt Harvey, Tenon, Rubicon, AMP, BIL International.
Caragata says that the major surprises in this report are the significant improvement of Sky Network Television, which is now the top rated NZ company, and Trustpower.

The NZX Top 50 Report outlines ratings ranking from one to 50 for all listed companies within the NZ Top 50. In addition to the ratings, it also includes rating outlooks for all companies. In the July 2004 edition, around 40% of the NZX Top 50 companies rated are indicating a positive outlook, 37% are showing a negative outlook and the balance of around 23% have a stable outlook.

The ratings are based on 62 financial ratios, which are benchmarked against data from more than 250,000 companies across 30 years from more than a dozen countries. Around 15,000 listed companies are rated in New Zealand, Australia, Singapore, Canada, the US and the UK.

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