Kiwi Equities a Good Bet for Global Investors
The New Zealand growth story is attracting strong international interest in Kiwi equities as investors seek to escape volatile markets in Asia and low global interest rates. The Wall Street Journal reports that the New Zealand Stock Exchange looks ever more attractive because it offers comparatively high dividend streams in addition to the strong dairy-driven economic growth.
The NZX50 hit a new record high of 4698.027 last week, overshooting the previous high set in May. Although tiny compared to Australia’s S&P/ASX 200 (US$40 billion versus US$1.3 trillion), the index has risen 16% this year – despite nearby Asia’s economic wobbles caused by investor flight from emerging economies.
The WSJ’s influential MoneyBeat column notes that the Government has embarked on an ambitious privatisation programme of its electricity generation and retail assets and this has been complimented by a number of high profile listings. The rebuild of the country’s second biggest city, earthquake-hit Christchurch, is also boosting business sentiment.
Also hitting highs were technology stock Xero, Auckland Airport and New Zealand’s largest company by market capitalisation, Fletcher Building.
The strength of the New Zealand economy appealed to international investors, says James Smalley, director at investment firm Hamilton Hindin Greene, particularly in a low global interest rate environment that is keeping a lid on yields for cash investment.