Surge in corporate activity boosts NZX
A flurry of corporate activity at the end of last year provided a major shot in the arm for the NZX, with the value of equity trades hitting their highest level ever last month.
According to figures released yesterday, the security market operator clocked up 76,000 equity trades in December, a 27 per cent rise on the same month a year ago.
But it was the value of those trades that stood out at $3.6 billion for the month, up from $3b in November and $1.3b in January 2012, marking the highest monthly level since the market operator started keeping records in 1986.
David Price, head of institutional broking at Forsyth Barr, said much of the spike was attributable to the surge in corporate activity towards the end of last year, the most notable of which was the Fonterra Shareholder Fund, which listed at the end of November.
The float attracted such high levels of international and local interest that the dividend carrying unit opened at $6.66, $1.14 higher than the initial float price.
Adding to the busy close of the trading year was Fairfax Media’s selldown of its 50 per cent shareholding in online market place provider Trade Me, which lured investors from both sides of the Tasman – many of whom missed out when the company dual-listed in Australia and New Zealand in late 2011.
Accounting software firm Xero also attracted $82 million to the market last year, when it sold $60m in new shares and $22m in existing shares to existing US investors Valar Ventures and Matrix Capital Management.
Activity was also helped by the standout performance of New Zealand stocks, with the NZX All Share Index up 27 per cent in 2012, and the vast amounts of cash sloshing around the New Zealand financial system.
Reserve Bank figures suggest there is almost $110b in cash currently sitting in retail bank accounts. That figure was boosted by the takeover of Fisher & Paykel Appliances by China’s Haier, which bought out the 80 per cent of shares it did not already own at $1.28, valuing the Kiwi whiteware maker at $927m.
And while it appears the gains were due to the stars aligning for a once-in-alifetime December, institutional investors are betting the level of corporate activity will continue in 2013.
‘‘Given the amount of cash around and the index levels, now is a good time to be looking at a float or partial selldown,’’ Price said.
First off the block will likely be state-owned electricity firm Mighty River Power and potentially Meridian Energy or Genesis Energy, but several sources have also confirmed increased levels in investment bank activity of late, particularly around new floats.
Peter Sigley, an institutional broker at Goldman Sachs and Partners believes the attraction of higher sharemarket yields will continue to lure funds from bank deposits and fixed interest, with the latter appearing to have reached the peak of its low interest rate bull run.
‘‘A number of high quality stocks offer decent income where earnings risk is diminishing, so from an income sense it’s still attractive,’’ he said.