NZX trading activity grows, but total value down 43%

WELLINGTON: NZX trading activity grew by more than a third in November from a year earlier, as the stock market operator’s efforts to drive trading through the bourse stoked a greater number of lowervalue transactions.

Total trades rose 35% to 295,112 in November from the same month a year earlier, and were up from 269,868 in October, NZX’s monthly shareholder metrics show.

However, the total value dropped 43% to $3.16 billion from November 2017 due to the rising number of smaller transactions. The prior period included a record trading day for the NZX, although it was in line with the $3.1 billion traded in October.

NZX has made it a priority to shift more activity on to the formal market as a means of improving price transparency and driving greater liquidity in listed securities. That includes a new pricing structure designed to encourage more activity, updated listing rules, and consolidating the three equity boards into one.

So far the trend has moved in the right direction.

Onmarket activity amounted to 50.3% of value traded in November, up from 42% in 2017 and 37% the year before.

The size of transactions has shrunk with the increased use of algorithmic trading; the average onmarket trade size of $8610 in November is down 47% from the same month a year earlier.

The equity market still dominates NZX trading, with 290,956 transactions for a $3.02 billion value. Of that, 51.2% was done on market. NZX data shows of the top five equities traded in November, just 27.5% of the value of Fletcher Building trading was onmarket, compared to a2 Milk’s 58%, Spark New Zealand’s 59.8%, Z Energy’s 40.7% and Fisher & Paykel Healthcare’s 46.6%.

New equity listings remained nonexistent in November, although $951 million of new debt was added to the NZX as corporates continue to find the listed debt market attractive. So far this year, just $20 million of new capital has been listed through a compliance listing, compared to $4.3 billion of new debt.

Secondary market capital raisings have been busy, with $271 million of new debt and equity raised last month, taking the year’s tally to $4.27 billion.

The market’s equity capitalisation was $133.95 billion, or 46.3% of GDP, at the end of November, up 2.1% from a year earlier, while the value of debt rose 12% to $30.51 billion, or 10.5% of GDP. — BusinessDesk