Sharemarket value rose 18pc in 2012

Last updated 11:09 22/01/2013

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Strong activity in the share market is likely to continue as interest rates remain low and more companies list in 2013, market watchers say.

The capitalisation of the New Zealand share market increased 18.3 per cent to 31.7 per cent of GDP in 2012, the NZX's metrics for last year show.

The equity market is now worth $66.1 billion. The key NZX 50 index rose 24.2 per cent to finish the year at 4067.

However the debt market decreased 8.3 per cent to $14.7b, representing seven per cent of GDP.

The bourse saw the total number of trades increase 21.8 per cent during the year to over 902,000 (an earlier verision of this story incorrectly said 902 million). The total value traded rose six per cent to $30.3b.

The market saw a surge of corporate activity towards the end of the year, most notably the Fonterra Shareholder Fund listing at the end of November.

Institutional investors are betting the activity will continue this year.

"Given the amount of cash around and the index levels, now is a good time to be looking at a float or partial selldown, " Forsyth Barr head of institutional broking David Price said recently.

First off the block will probably be state-owned electricity firm Mighty River Power, and potentially Meridian Energy or Genesis Energy.

Also mid-sized Kiwi businesses are increasingly being courted by private equity firms, which previously floated companies like Kathmandu as a means of cashing out.

There is a lot of cash in the New Zealand financial system to support potential floats. Reserve Bank figures say almost $110b was sitting in retail bank accounts in late November.

A potential impediment could be that investors see little untapped worth left in New Zealand equities after the strong gains last year.

However brokers say the attraction of higher sharemarket yields will continue to lure funds from bank deposits and fixed interest. 

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- BusinessDay.co.nz

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