UBS NZ investment banking head Nick Ross says the NZ capital markets haven't been as vibrant as they have been lately for about 20 years, pointing to a "weight of money" which is now seeking investment alternatives.
"We've had a very busy time and been involved in most of the major equity raisings be it from Trade Me to the Fonterra shareholders fund," says Ross.
"The spread has never been greater between the average market dividend and the amount you can get by putting your money in the bank," adds Chris Simcock, UBS NZ's executive director investment banking.
Ross points out a lot of New Zealand families and "mum and dad" investors have enjoyed investing directly in the corporate bond market since the Global Financial Crisis.
"But now people are going from earning 8-9 per cent to half that, and if you are my mother and you rely on that enormously, you've had your income halved."
The UBS executives welcome the renewed interest in New Zealand from the international investment community. "Trade Me was a fantastic IPO and we saw huge interest from international investors in Fonterra, MOM has been well-flagged and a lot of roadshows have been done," says Ross. "People are now in the situation where for the first time in a long time they own a reasonable portfolio of NZ assets."
Simcock says interest is filtering through to mid-cap stocks where there is substantial Australian investor interest and an appetite for dual listings for medium-sized NZ companies.
The pair point out the global market is now looking at New Zealand somewhat differently to Australia. There has been a sea change in a relatively short time.
People get the fact that New Zealand has stable and transparent government and good frameworks. They are also less worried about investing here because they are more confident our currency is going to stay where it is. The soft commodity story is also a selling point.
Ross says Asia is very expensive and Australia is a little out of favour - "so if you are looking for diversity and stability and you've got product, which we have, then the funds will take positions here."
On the domestic front, Simcock says as the traction around KiwiSaver grows locally and the pool of capital under funds management increases there will be a greater allocation for investment in NZ. "Now might be a good time, when interest rates are at an all time low, to start thinking about being in a more active fund," he adds. "I think a very positive spin-off from KiwiSaver is that it will make people more financially savvy and think about how they are investing."
Their overall verdict on the NZ capital market? "To sum up, low interest rate environment, relatively strong economy and growth in the right spaces like agriculture. An extremely efficient export sector and market liquidity and a positive external lens on New Zealand.
"And we're one of the few countries in the OECD that is not printing money which is going to underpin the currency."