NZX performs above the pack
New Zealand’s sharemarket is the fourth-best performing since 1900, new data shows.
Credit Suisse’s latest Global Investment Returns Yearbook shows how markets around the world have fared. It includes 120 years of data on stocks, bonds, bills, inflation and currencies.
The report shows that equities are the best long-run financial investment.
Over 121 years, global equities provided an annualised return, in US dollars, of 5.3 per cent a year, versus 2.1 per cent for bonds.
The yearbook put Australia as having the best-performing sharemarket over the time, with an annualised real return of 6.8 per cent a year since 1900. In US-dollar terms, that put Australia ahead of the United States, South Africa and New Zealand.
New Zealand had a return of 6.5 per cent a year since 1900.
Credit Suisse’s head of private banking for Australia, Michael Marr, said it showed that markets had been resilient despite the disruption of Covid-19.
‘‘A legacy of this crisis is record-low real interest rates and now-burgeoning fiscal deficits as governments have sought to soften the blow . . . However, the policy dilemma of if, and how, to unwind these crisis measures looms large, particularly with inflation expectations firming.
‘‘The yearbook underlines the constraints for returns that a baseline of low real rates poses, if rates have indeed bottomed. The historical precedent would be for more modest real equity returns in their wake but perhaps even greater challenges for bonds after their ‘equity-like’ returns.’’
Andrew McAuley, Credit Suisse’s Australian chief investment officer for private banking, said that in the shorter term, New Zealand’s equity and bond market returns had been stellar, exceeding those of almost every other country including Australia.
‘‘Over the 20 years from 2001 to 2020, its equity and bond markets have produced annualised real returns of 9.3 per cent and 6.4 per cent respectively. This reflects the diversification of its economy away from primary industries to include tourism, technology and medical devices.’’
He said focusing on short-term trends sometimes meant people lost sight of bigger changes that happened slowly.
‘‘Almost two-thirds of companies in the US by value today were either absent or small in 1900.
‘‘The evolution of industry is the story of progress and societal trends and underscores the importance of looking ahead, living forward and identifying the key societal trends that will shape our world in the future.’’