Stock trading fell, debt rose in 2008 as economy contracted

Tuesday 6th January 2009

The value of trading on the New Zealand stock exchange dropped 18% last year as the economy fell into its first recession in a decade, sending equities to their worst slump since 1990.

The total value trading in shares, debt securities and warrants fell to NZ$28 billion from NZ$32.7 billion in 2007, according to figures from NZX Ltd. Daily trading fell 18% to NZ$111 million.

Total trades fell just 5% to 590,758, or 2,344 a day last year, NZX said. The biggest impact of the economic slump and global credit freeze was a drop in equity capital raising, which more than halved to NZ$1.03 billion from NZ$2.79 billion in 2007.

New debt raised fell to NZ$2.08 billion from NZ$2.7 billion. The value of trading in debt securities alone gained 41% to NZ$1.9 billion as the market value of the debt listed on the NZX climbed 20% to NZ$12 billion.

The market capitalization of equities traded on the NZX slumped to NZ$46.65 billion from NZ$71 billion. The benchmark NZX 50 Index fell 33% last year while the NZAX market for start-ups and small caps dropped 30%.

The value of trade on the NZAX declined 54% to NZ$18 million in 2008 and trading in installment warrants tumbled 59% to NZ$44 million.

Shares of NZX, manager of the exchange, fell 1.3% to NZ$5.36 today and have declined 39% in the past 12 months. The company has reduced operating costs, lifted data sales and sought to diversify its revenue streams, helping lift third-quarter profit by 23%.

By Jonathan Underhill

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