NZX cash trading values fall for a third month, volumes tick up

The total value traded across the stock market operator's equity and debt markets fell 9.2 per cent to $4 billion in March.

The value of trading on NZX's markets fell for a third month in March, even as the volume of activity increased in the wake of company earnings season.

The total value traded across the stock market operator's equity and debt markets fell 9.2 per cent to $4 billion in March from the same month a year earlier, with the average daily value shrinking 178 per cent to $175 million. That was still higher than the $2.8b, or $149m a day, in February when companies on a June or December financial year announced first-half and annual earnings in what investors characterised as underwhelming.

The total volume of trading rose 2.8 per cent to 171,644 from a year earlier, with a 4.5 per cent increase in transactions of less than $50,000 to 151,634, indicating smaller retail investors were busier in the month. Still, daily activity was down 6.2 per cent to an average 7,463 transactions.

In the year to date, the total number of trades was down 5.1 per cent at 419,842 from a year earlier and the value traded fell 9.1 per cent to $9.1b.

Equity trading continued to dominate the bourse, with the total number of transactions rising 2.7 per cent to 167,755 in March, while the value traded dropped 9.3 per cent to $3.9b. The debt market, which has been invigorated over the past year with a flood of new issues, posted a 6 per cent increase in transactions to 3,889 while the value traded fell 6.3 per cent to $169m.

New Zealand stocks typically offer high dividends compared to other markets and that yield has attracted international investors to the local bourse in a low interest rate environment. That's raised questions about whether firms valuations relative to earnings are getting stretched, however the benchmark S&P/NZX 50 index's price-to-earnings ratio of 15.72 times is still lower than many of its peers, including Australia's S&P/ASX 200 index which has a PE ratio of 19.18 times, China's Shanghai Shenzhen CSI 300 index trading at a PE ratio of 19.39 times, and Wall Street's Standard & Poor's 500 index which was recently at 21.37 times.

The local stock market hasn't completed any new initial public offerings or compliance listings so far this year, although aged care operator Oceana Healthcare has recently signalled plans to raise $200m in an IPO, listing on the NZX and ASX in May. Some $250m of new debt was listed in March, taking the year-to-date tally to $640m.

Listed issuers raised $107m of equity last month across 14 events, taking the year-to-date capital raised to $561m, of which $198m has been via debt.

The value of NZX's equity markets was $117.7b, or 45.1 per cent of gross domestic product, as at March 31, up 1.9 per cent from a year earlier, while the debt market value rose 27 per cent to $26.4b, or 10.1 per cent of GDP.

The stock market had fewer equity securities listed from a year earlier, down 3.5 per cent at 166, while debt listings rose 21 per cent at 110.

NZX's Smartshares and SuperLife funds management business increased total funds under management 17 per cent to $1.83b in March from a year earlier, with a 24 per cent increase in KiwiSaver funds to $640m.

The stock market operator's stock last traded at $1.06 and has edged up 0.6 per cent so far this year, lagging behind the 3.8 per cent gain in the S&P/ASX All Index over the same period.