By Paul McBeth
Dec. 6 (BusinessDesk) - 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 lower value transactions.
Total trades rose 35 percent 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 percent 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 with on-market activity amounting to 50.3 percent of value traded in November, up from 42 percent in 2017 and 37 percent the year before.
The size of transactions has shrunk with the increased use of algorithmic trading, with with the average on-market trade size of $8,610 in November, down 47 percent 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 percent was done on market. NZX data shows of the top five equities traded in November, just 27.5 percent of the value of Fletcher Building trading was on-market, compared to A2 Milk's 58 percent, Spark New Zealand's 59.8 percent, Z Energy's 40.7 percent and Fisher & Paykel Healthcare's 46.6 percent.
The metrics show 3,156 debt transactions worth $149 million in November, of which 94.2 percent were on-market. In the year-to-date, the number of trades was up 60 percent at 3.01 million, while the value traded was down 13 percent at $35.73 billion. Of that, 53.1 percent of value was traded on-market.
New equity listings remained non-existent in November, although $951 million of new debt was added to the NZX as corporates continue to find the listed debt market an attractive alternative to bank funding. 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. The $1 million Carbon Fund listed in November.
Secondary market capital raisings have been busy, with $271 million of new debt and equity raised in November, taking the year-to-date tally to $4.27 billion. Of that, $1.4 billion has come from New Zealand issuers, $668 million from dual or foreign issuers, $777 million from domestic funds, $174 million from dual or foreign funds, and $1.25 billion of debt.
NZX had 310 listed securities at the end of November, up 3.3 percent from a year earlier, due largely to a 15 percent increase in debt securities to 132. Equity securities were down 5.5 percent at 138.
The market's equity capitalisation was $133.95 billion, or 46.3 percent of GDP, at the end of November, up 2.1 percent from a year earlier, while the value of debt rose 12 percent to $30.51 billion, or 10.5 percent of GDP.
The benchmark S&P/NZX 50 index ended November at 8,824, up 7.8 percent from a year earlier. It was recently at 8,793.99.
The stock market operator's derivatives futures market posted a 16 percent increase in total lots traded at 24,791 in November from a year earlier, while options more than doubled to 6,700. Open interest increased 28 percent to 62,756.
Professional wholesale data terminals declined 1.3 percent to 5,995 from a year earlier, while retail terminal numbers increased 3.2 percent to 1,308. Dairy data subscriptions rose 24 percent to 961.
NZX shares were unchanged at $1.02, down 7.7 percent so far this year.