End-of-quarter changes in MSCI indices worldwide have produced contortions in several stocks here and internationally, which Salt Funds managing director Matt Goodson says highlights the role that automated trading plays, as funds adjust their holdings in accordance with stocks' weightings in the MSCI.
He says that in broad terms, the general surge in the markets has taken place in the face of numerous difficulties on the earnings front - such as the unrest in the US - and the fact that interest rates appear to have bottomed out at very low levels.
"There seems to be a wall of money designed to buy equities at the moment," says Goodson.
However, he puts some of the more pronounced changes in stock prices down to "machine style trading".
For example, the NZX-listed retirement village company Ryman fell from $12.92 to $12.10 on May 29 as it was downweighted in the MSCI, only to bounce to $13.25 on June 2.
"It shows you just how prevalent that sort of money is in the market."
Goodson says the increased presence of retail investors has played a part in the markets' resilience.
"Globally they have been a real factor, and we have seen that in the US with [financial services company] Robinhood recording massive increases in volumes - heavily skewed to the buy side," says Goodson.
"On the one hand, the market is perhaps looking forward a couple of years, which is quite bold.
"On the other hand, with interest rates being crushed and people getting nothing on their term deposits, in some sense they have been pushed into equities," he says.
"The problem is that the forward price/earnings ratio of the market is at never-before-seen levels.
"The real test will be in a month or two's time, when mortgage holidays start to roll off and as the work subsidy scheme becomes less generous," Goodson says.
"That will be the real test for the economy and perhaps for the market."
MIEPAY goes public
New Zealand financial technology company MIEPAY has raised A$3.3m in an initial public offer on Australia's National Stock Exchange (NSX).
The NSX, an alternative to the ASX, focuses on start-ups and mid-sized companies.
Chairman Roger J Kerr said the money raised would largely be used to fund the growth and development of MIEPAY's two business units: digital payment solutions provider IE Pay; and e-commerce platform IE MALL.
Kerr said that with Australia and New Zealand making progress towards containing the Covid-19 virus, now was the ideal time for MIEPAY to go public.
"While we can't necessarily say how individual industries – let alone specific companies – are going to fare in the coming months, we can expect economic activity to pick up as restrictions around travel and retail trading ease, and we can certainly say that digital payments and e-commerce are very likely to make up an ever-increasing share of that economic activity," Kerr said in a statement.
InvestNow breaks $500m
Investment platform InvestNow has reached more than $500m under management.
The online platform offers clients free access to a range of more than 140 funds managed by 23 underlying investment firms across a range of asset classes and countries.
General manager Mike Heath says hitting the half-billion mark in just over three years since launch proves the potential in the previously under-served direct investment market in New Zealand.
"When InvestNow launched early in 2017, self-directed fund investors had very little choice – and what options they had were expensive and inefficient," Heath says.
InvestNow had also expanded on the back of two key strategic purchases: the Rabobank fund platform in April 2018; and buying the AMP Capital direct client book this year.
