NZX cash trading values fall for a third month, volumes tick up

The value of trading on NZX's markets fell for a third month in March, even as the volume of activity increased in the wake of company earnings season.

The total value traded across the stock market operator's equity and debt markets fell 9.2 percent to $4 billion in March from the same month a year earlier, with the average daily value shrinking 178 percent to $175 million. That was still higher than the $2.8 billion, or $149 million a day, in February when companies on a June or December financial year announced first-half and annual earnings in what investors characterised as underwhelming.

The total volume of trading rose 2.8 percent to 171,644 from a year earlier, with a 4.5 percent increase in transactions of less than $50,000 to 151,634, indicating smaller retail investors were busier in the month. Still, daily activity was down 6.2 percent to an average 7,463 transactions.

In the year to date, the total number of trades was down 5.1 percent at 419,842 from a year earlier and the value traded fell 9.1 percent to $9.1 billion.

Equity trading continued to dominate the bourse, with the total number of transactions rising 2.7 percent to 167,755 in March, while the value traded dropped 9.3 percent to $3.9 billion. The debt market, which has been invigorated over the past year with a flood of new issues, posted a 6 percent increase in transactions to 3,889 while the value traded fell 6.3 percent to $169 million.

New Zealand stocks typically offer high dividends compared to other markets and that yield has attracted international investors to the local bourse in a low interest rate environment. That's raised questions about whether firms valuations relative to earnings are getting stretched, however the benchmark S&P/NZX 50 index's price-to-earnings ratio of 15.72 times is still lower than many of its peers, including Australia's S&P/ASX 200 index which has a PE ratio of 19.18 times, China's Shanghai Shenzhen CSI 300 index trading at a PE ratio of 19.39 times, and Wall Street's Standard & Poor's 500 index which was recently at 21.37 times.

The local stock market hasn't completed any new initial public offerings or compliance listings so far this year, although aged care operator Oceana Healthcare has recently signalled plans to raise $200 million in an IPO, listing on the NZX and ASX in May. Some $250 million of new debt was listed in March, taking the year-to-date tally to $640 million.

Listed issuers raised $107 million of equity last month across 14 events, taking the year-to-date capital raised to $561 million, of which $198 million has been via debt.

The value of NZX's equity markets was $117.7 billion, or 45.1 percent of gross domestic product, as at March 31, up 1.9 percent from a year earlier, while the debt market value rose 27 percent to $26.4 billion, or 10.1 percent of GDP.

The stock market had fewer equity securities listed from a year earlier, down 3.5 percent at 166, while debt listings rose 21 percent at 110.

NZX's Smartshares and SuperLife funds management business increased total funds under management 17 percent to $1.83 billion in March from a year earlier, with a 24 percent increase in KiwiSaver funds to $640 million.

The stock market operator's stock last traded at $1.06 and has edged up 0.6 percent so far this year, lagging behind the 3.8 percent gain in the S&P/ASX All Index over the same period.

(BusinessDesk)