Kiwi stocks up despite global jitters

LAURA WALTERS
Last updated 05:00 05/03/2014

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New Zealand shares pushed higher yesterday in the face of sharp falls on world stock markets in response to escalating tensions in Ukraine.

The benchmark NZX 50 gained another 0.52 per cent to close at 5033.26 points, having broken through 5000 points for the first time on Monday.

Analysts say the New Zealand sharemarket is benefiting from the strong domestic economy which is no longer as coupled to world events as it once was.

Global markets dropped on Monday due to the deteriorating situation in Ukraine after Russia's moves to occupy the Crimea peninsula.

Investors flocked to safe havens such as gold, the Japanese yen, the Swiss franc and the United States dollar and away from equities and risk currencies.

But Asian markets stabilised yesterday with Hong Kong, Tokyo and Singapore all opening higher, while Shanghai, Korea and Jakarta slipped marginally in early trading yesterday. Australia's S&P/ASX200 was up 0.33 per cent in late afternoon trading at 5402.5 points.

The New Zealand sharemarket has fared better than global markets during the past few days. Market commentator Arthur Lim said, "We don't need to dance to the overseas tune as much as we used to. One of the things it reflects is our economy and companies are not as vulnerable as they once used to be."

Lim said there was debate about whether the NZX was actually trading at an all-time high relative to the 1980s boom years.

But passing through 5000 points reflected that "the market has actually had a very, very good run".

"Ultimately, the sharemarket is a barometer of economic health," Lim said.

The NZX was "without a question" in better shape now than it was during the 1980s, he said. Today's listed companies had better corporate governance and accounting practices.

While the NZX 50 could post further gains, future growth would not match gains from the past couple of years, Lim said.

Director of stockbroking firm Hamilton Hindin Greene, Grant Williamson, said technically the NZX 50 gross index was not trading at all-time highs. The capital gains of the former Barclays New Zealand stockmarket before the 1987 sharemarket crash were higher.

However, taking into account price gains and dividends, the NZX 50 gross index, which was introduced in 2003, was trading at an all-time high. A gross index replaced the old benchmark Barclays index in 1992 following the 1987 crash that led to the sharemarket shedding almost 15 per cent in one day.

But the stockmarket gains, made on the back of the strong economy during the past couple of years, were worth noting, Williamson said. "We should be making a big deal of it. The New Zealand market is doing really well." The NZX 50 gained 16.5 per cent last year, following a lift of 25.7 per cent in 2012.

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Williamson said the NZX 50 could "come off a bit" if global markets continued to get the jitters about what was happening in Ukraine.

However, a crash was not on the cards. Putting issues in Ukraine aside, the economy was in a "sweet spot" that would remain for "some time".

- BusinessDay

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