The New Zealand equity market's share of gross domestic product has shrunk to about a third of its Australian counterpart's, as its role in the provision of risk capital dwindles, underlining the need for new listings such as state-owned companies and Trade Me.
The equity market's share of GDP has
declined to 31 per cent, from 56 per cent 15 years ago, according to a survey by Goldman Sachs & Partners.
In that time, the Australian stock market's share of that country's GDP has grown to 89 per cent from 68 per cent. In the U.S, the percentage is 89 per cent and for Canada 109 per cent.
"A declining role in the economy has meant market liquidity has suffered," Goldman Sachs says. Potential new floats are "necessary to reverse the negative feedback loop of declining supply that has been in play over the past decade."
The survey of 51 stocks shows foreign ownership of New Zealand equities was little changed in the June quarter at about 36 per cent. Local managed funds made the biggest gains, accounting for 22.3 per cent, equal to the portion owned by retail investors, and the highest reading since the survey was started in 1997.
