NZX shifts more trading on-market in August in busier market

Wednesday 5th September 2018

NZX continued to shift more trading through official channels, known as on-market transactions, in an increasing number of smaller value deals in August.

The stock market operator is introducing a raft of initiatives aimed at boosting trading liquidity, including getting more transactions performed through the bourse, to improve the transparency of pricing for investors, and is now tracking that split between on- and off-market trading more closely in its monthly metrics.

In August, the value of debt and equity transactions through the market rose 4.9 percent to $1.58 billion from the same month a year earlier, amounting to 53.1 percent, and an improvement on 50.3 percent in July. Actual trading activity climbed 60 percent to 287,735 in August, although the average on-market size shrank 28 percent to $7,846, and the total value traded dropped 29 percent to $2.97 billion. The daily average value traded was $129 million.

The monthly metrics include an outage last week when regular system testing shut down trading for most of the day, although the following day's activity largely made up for lost time.

Today's metrics show the volume of share trading climbed 62 percent to 284,880, for a 29 percent decline in value traded to $2.85 billion, while debt market trading shrank 11 percent to 2,855 for a 24 percent decline to $127 million. Year-to-date activity climbed 73 percent to 2.17 million transactions, while total value traded shrank 5.6 percent to $25.91 billion. The value of on-market trading was 53.3 percent.

The S&P/NZX 50 index reached a new record in August as the prospect of lower interest rates for longer spurs demand for New Zealand's reliable dividend stocks. The index ended the month at 9,313, up 19 percent from a year earlier, and closed yesterday at 9,292.15. Equity market capitalisation was $138.3 billion, or 48.3 percent of gross domestic product, while debt market capitalisation was $27.31 billion, or 9.5 percent of GDP.

NZX still struggled to attract new listings in August with no initial public offerings or compliance listings. Some $150 million of debt was listed in August and several debt offerings are on the cards for September. Total listed securities fell 1.6 percent to 300 in August from a year earlier.

Still, firms' appetite for new capital remained strong, with $337 million raised in the month across 99 events, taking the year-to-date total to $3.44 billion.

NZX's derivatives futures registered a 12 percent decline in lots traded to 22,317 in August from a year earlier, while options trading jumped 90 percent to 8,610. Open interest increased 5.4 percent to 65,257.

The stock market operator's professional data terminal numbers fell 2 percent to 6,009 while its retail terminals rose 1.5 percent to 1,299, and its dairy data subscriptions climbed 30 percent to 989.

NZX's SuperLife funds under management grew 19 percent to $2.19 billion and its Smartshares funds climbed 34 percent to $2.63 billion.

The shares last traded at $1.06, having declined 4.1 percent so far this year.

(BusinessDesk)

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