By GEOFF SENESCALL
Financial markets have had a rocky year, with the exception of technology stocks.
While the dollar and interest rates have been gyrating and the sharemarket has performed at best average, internet/e-commerce companies have been rocketing to dizzy heights.
They make up the top five performing stocks on the New Zealand market this year, and their returns have been phenomenal.
In order of ranking, Strathmore has topped the list with a 2100 per cent return, which is a 20 times increase in value.
E-phone, formerly Habitat Group, has seen an 11-fold increase, Advantage and Spectrum five-fold increases each and IT Capital a 3.5 per cent rise. These performances are based on returns from the beginning of the year to December 20.
The massive returns are consistent with e-commerce companies overseas.
It took the tiny Australian investment company Revesco, in No 6 spot, to break the run. Following it is Paynter Corporation, which is moving into e-commerce.
It is only at eighth spot that the first substantial company outside the e-commerce area, with a market capitalisation of more than $100 million, comes in - Tourism Holdings.
Arthur Lim of broker Ord Minnett said the IT revolution came late to New Zealand, so 1999 was a year of catchup.
"While phenomenal gains have been made, it is too early to say who the winners will be. Today's landscape will not be tomorrow's.
"At the moment we are riding a speculative boom. But the bubble will inevitably pop. The sign of this is when the IT industry matures and consolidation occurs.
"So far, however, there is little sign that this is anywhere near."
New Zealand IT stocks are also starting to catch the eye of overseas investors.
Advantage recently found renowned hedge fund investor George Soros on its register. IT Capital was mentioned in the well-known US internet tip sheet Red Herring.
While technology companies have been in favour, it is the property stocks which are bunched at the other end of the performance stakes.
Capital Properties, Trans Tasman Properties, CDL and even Ports of Auckland, which is exposed to the property sector, all had a bad year.
But holding the dubious distinction of being the worst performer is Roller International, a company involved in the travel and hospitality industry.
Its share price fell 66 per cent - although only 70,000 shares traded all year.
The performance on the New Zealand sharemarket overall has been mixed.
The benchmark NZSE-40 capital index was up around 7 per cent for the year. While modest, it was its first positive return in three years.
This compares to an 11 per cent gain on the Australian All Ordinaries index, a 21 per cent rise on the US Dow Jones Industrial average, 31 per cent on Japan's Nikkei 225 index and 14 per cent on Britain's FTSE100 index.
Asian markets in general also performed well throughout 1999, although off a low base.
New Zealand's performance looks better when taking account of dividends and capital returns. Indeed, the NZSE-40 gross index was up 14.2 per cent.
Compared to other markets New Zealand has typically been a high-yield, low-growth story. It is also a reflection of our high interest rates, meaning that to compete for capital, equities have had to offer a high yield.
Where the local market has really shone this year is in the small cap stocks. Helped by the burgeoning IT sector, the Small Companies Index rose 34 per cent.
In comparison, the US technology index Nasdaq was up 73 per cent.
Neil Paviour-Smith of broker Forsyth Barr said that compared with the past two years, 1999 had a relatively stable world environment.
"In 1998, we had the Russian crisis and 1997 brought the Asian crisis, which caused considerable volatility in world markets," he said.
"This year we have had quite a stable world environment. There has been a settled Japan and a growing Asia, growing world economies and gradually improving sharemarkets.
"Domestically, we have had a recovering economy, which has been held back a little because of the recent general election and the 'what ifs' of a left-wing Government.
"Interest rates have risen during the year, but not to any significant magnitude."
Mr Paviour-Smith said that while the big cap stocks had not performed well over the year, there was some cause for encouragement.
Two long-time laggards, Carter Holt Harvey and the Fletcher group, this month announced major restructuring; Carter sold its Chilean asset Copec and Fletcher is to unwind its letter stock structure.
"The market has been looking for this for years. They have finally swallowed the medicine. There is a lot of work to be done but the prognosis is a lot clearer now.
"Going forward bodes well for the large companies and therefore index performance. That is good for the market perception overall, especially from a foreign investment point of view.
"It will help bring foreign investors back to New Zealand."
This year will also be the last that Brierley Investments, which is migrating overseas, will play a part in the major cap index. Given its performance, this should prove a bonus.
Telecom could be set for another burst after spending much of 1999 repositioning itself, undergoing management changes, a move into Australia through AAPT and the emphasis on the internet and mobility.
Other features over the year were three major listings, Contact Energy, Westpac and Tower Corporation. These brought tens of thousands of first-time New Zealand investors to the market.
Other smaller issues included Ryman Healthcare and Calan Healthcare.
There were also many back-door listings. New Zealand Salmon turned into Newcall, Iddison Group turned into IT Capital, Habitat became E-phone and New Zealand Petroleum is now Eldercare.
Strathmore was also stripped of its assets and turned into a IT company as well.
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