Shares at record highs has stoked trading activity

New Zealand's stock benchmarks have rallied to record highs this year and the gains appear to have added to enthusiasm for the market, with big jumps in trading activity, NZX's operating metrics show.

Total equity trades jumped 61 percent to 213,884 in October from the same month last year and the total value of shares traded rose 33 percent to $4 billion, NZX said. On the NZDX market for debt securities, the gains were more modest, with total trades up 8.8 percent to 3,392 and the value traded gaining 7.4 percent to $177 million.

The S&P/NZX 50 Index has climbed 17 percent this year, led by A2 Milk, Synlait Milk and Xero, while the broader All Index has gained 13 percent. Euphoria over A2's infant formula prospects in China has added fuel to a stock market that was already benefitting from prolonged low interest rates, which have limited returns from debt securities and bank deposits.

NZX's monthly data again showed the dearth of new companies coming to market. Total equity securities fell 5.3 percent to 162 in October from a year earlier while listed debt securities rose about 13 percent to 114. There were no initial public offerings or compliance listings last month and year-to-date $480 million has been raised. In October, $100 million of debt securities were sold, bringing the year-to-date total to $2.77 billion.

Secondary capital raisings were $318 million in the month and $3.35 billion so far this year.

The market capitalisation of all equity securities rose 12.3 percent year-on-year to $131.3 billion, equivalent to 48.6 percent of gross domestic product. The value of debt securities gained 10 percent to $27.1 billion, or 10 percent of GDP.

The monthly metrics showed strong gains for some of NZX's other businesses. In its derivatives market, the total of futures lots traded jumped almost 50 percent to 25,997 in October from a year earlier while total lots of options fell 12 percent to 1,900. Open interest gained 39 percent to 51,391.

In its SuperLife business, KiwiSaver funds under management rose about 25 percent to $723 million, while other funds gained 15 percent to $1.2 billion, bringing the total FUM to $1.9 billion. In Smartshares, the total rose 27 percent to $2.1 billion as units on issue climbed 14.5 percent to $859 million.

NZX wealth technologies FUM fell 8.2 percent to $1.18 billion.

In NZX's Agri division, subscriptions to NZ agri data products rose 30 percent to 3,077 while Australian data product subscriptions fell 3.5 percent to 1,509. Total paid advertising page equivalents for its Farmers Weekly title rose 16 percent to 218 in October from a year earlier. While year-to-date they fell 49 percent to 906.

Last week, NZX posted a 4.4 percent decline in third-quarter revenue to $18.5 million as a tepid environment for new listings weighed on the stock market operator's income. NZX is forecasting earnings before interest, tax, depreciation and amortisation of between $27 million and $30 million in calendar 2017, up from $22.5 million last year.

The stock market operator has been undertaking a review of its various businesses and is expected to announce the outcome this month.

The shares last traded at $1.20 and have gained 14 percent so far this year.

(BusinessDesk)