NZX50 trades at 5-year high
Yield hungry investors continued to drive the performance of the New Zealand sharemarket in afternoon trade, putting the bourse on track to close at its highest level since December 2007.
The NZX 50 Index rose 4.22 points, or 0.11 per cent, to 4,012.56, slightly lower than the midday mark, but well still supported by shareholders who'd bought 18 million shares so far on the day, worth $56 million.
That more than recoups all the ground lost since before the global financial crisis, putting the bourse just 8 percent below its all time peak of 4342 points, which it hit in July 2007.
Traders said the NZX50 continued to attract offshore investors who were looking to maximise yield on their capital.
That's because long-term low interest rates in much of the developed world has made investment earnings from bonds and cash deposits relatively unappealing.
New Zealand's equity market, often characterised as "sleepy" by many equity investors who chase returns in bigger markets, has surprised almost everyone in the September quarter by outperforming every other developed market bourse.
Since June 1, the top 50 companies on the NZX have returned 15 per cent, whereas Australia's S&P/ASX 200 Index returned just 8 per cent over the same period.
Bryon Burke, head dealer at Craigs Investment Partners, said valuations - or the premium investors are willing to pay to own a stock - are starting to look at little stretched at this level, but it remained "one of this good problems to have, one that doesn't come along often in equity markets".
On the day PGG Wrightson, the rural services provider, led gainers with a positive gain of 6 per cent to 35c amid bets the firm's back-to-basics strategy will deliver improved earnings in the medium term.
OceanaGold, the operator of the Macraes and Reefton goldfields, fell 2.3 per cent to $4.25 as less fearful investor sold down their positions in defensive stocks.