Continuous Disclosure

Since listing on its own exchange back in 2003, NZX shares have largely mirrored the performance of the NZSE-50.

Like the NZSE-50, the NZX had a two-year golden run, climbing steadily to a high of $10.50 a share by March 15.

But, within a week of the sharemarket going into decline that month, shares in the NZX followed suit.

When the exchange began to rally again last month, the NZX did the same. But this month NZX shares have taken a solo dive while the rest of the market continued to chug along nicely.

The divergence appears to be related to a drop in the volume of trades on the exchange.

NZX operating figures for last month show the number of market transactions declined for the second month in a row, despite the value of trades continuing to rise.

At the AGM on Thursday, NZX chairman Simon Allen warned the company's second-quarter earnings - before one-off items - were likely to fall by almost 25 per cent.

As economic times get tougher and big company profits fall, it seems retail investors are steering their investment dollars away from the market.

The NZX is also dealing with costs associated with the collapse of Access Brokerage and extra costs for its new Smartshares fund management business.

Despite the rough month, NZX chief executive Mark Weldon is optimistic the company will soon see trading volumes back on track. He said there was already anecdotal evidence that retail investors were returning to the market.

The Smartshares business was performing well and, although capital raising was more focused on debt markets than IPOs this year, it was still at about the same level as last year.