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Locals take more of NZ sharemarket

Monday 11th July 2005

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Offshore ownership of the New Zealand sharemarket has continued to decrease, according to brokers Goldman Sachs JB Were.

In its latest report on the makeup of the local sharemarket is says that retail investors have slightly increased their ownership of the market and there is greater liquidity.

It says that local strategic investors have increased their stake in the market.

“We estimate that 17.1% of New Zealand equities are owned by local strategic investors, up from 15.1% in 2004,” Goldman Sachs JB Were analyst Shamubeel Eaqub says.

Eaqub says that managed funds have broadly maintained their stake in the market (currently 15.6%), but that may increase. The driver for any increase is the tax changes outlined by Finance Minister Michael Cullen in this year’s budget.

Those changes include the removal of the capital gains tax on local managed funds.

“We would expect this to increase the attractiveness of investing through managed funds in listed New Zealand equities.”

However, Eaqub says this change may be at the expense of directly-owned holdings.

Eaqub says that one of the drivers behind the change in offshore ownership is some one-off transactions. The most significant being the transfer of Australian Gas Light's 66% stake in Natural Gas Corp to Auckland's Vector and the sale of Gunther and Brenda Gschwenter's 13.6% stake in Tourism Holdings.

“The current market structure, in our opinion, appears to have reached a broad equilibrium. Overall, the New Zealand equity market ownership structure appears to have aided ongoing recovery in market liquidity in recent years. We estimate market liquidity (median turnover/day) to have increased by 22.6%p.a. over the last two years.”

Current ownership:
Offshore strategic stakes 15.9%
Other offshore owners 28.4%
NZ strategic stakes 17.1%
NZ managed funds 15.6%
NZ retail investors 23.0%

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