13 Sep New Zealand and Australian Stock Market
In a report compiled by the Australian Security Exchange, it is estimated that 6.48 million investors (36%) have some form of share ownership either directly or through managed funds or superannuation schemes. In New Zealand, the number of individual investors has also dramatically increased in recent years, particularly with the public offerings of former state or local government-owned businesses. There has also been a government-led push in New Zealand to get people to think about investing for their retirement. However, New Zealanders traditionally like to invest in real estate rather than the stock market due to various reasons such as small markets, lack of knowledge about the market and availability of information.
The New Zealand stock exchange (NZX) is a small exchange and at the end of August 2017 it had a capitalisation of NZ$155.2 billion with a total of 305 listed securities. In comparison, the Australian market has a capitalisation of A$1.6 trillion with a total of 2,192 listed securities. Although Australia is more than 10 times bigger than the NZX, it is still small by world standards. The biggest stock exchanges in the world ranked by its market cap are NYSE ($19.2 trillion), NASDAQ ($6.8 trillion), London Stock Exchange ($6.2 trillion), Japan ($4.5 trillion).
While New Zealand may be small on a global scale there are still significant investment opportunities locally. In addition, access to the Australian market has become increasingly easier for New Zealanders with discount internet stockbrokers allowing trading on the Australian markets with relative ease and efficiency. Brokerage costs have fallen dramatically and many New Zealanders have taken the opportunity to invest in Australian companies, particularly via the Internet. In New Zealand, majority of the market value contained within the top 50 largest companies. This group of 50 companies is referred to as the NZX50 and is the most widely used indicator of New Zealand market performance.
Due to its larger size the Australian Stock Exchange (ASX) offers more opportunities to invest. The ASX 200 constitutes top 200 Australian companies and are widely bought and sold making them very “liquid”.
Many New Zealand investors remain cautious of investing outside of the NZX. Those that do take the opportunity to explore the ASX and other international markets will be pleasantly surprised that the rules of investing remain the same throughout the world.