Telecom's month of woes means bumper trading for NZX

The sharemarket fallout from Telecom's horror month drove bumper May trading for market operator NZX, with the value of shares traded on the main board more than twice that in April.

The total value traded across all NZX's markets in May was $4.6 billion with an average daily value traded of $199 million. "This is the most value traded and the highest average for a single month in three years," NZX said.

Transactions on the main board were up 16 per cent by volume, but at $4.39 billion were up 69 per cent by value compared with last May and 104 per cent up on April.

NZX head of markets Geoff Brown confirmed the steep sell-off of Telecom shares, precipitated by Communications Minister David Cunliffe's May 2 announcement of an unfavourable new regulatory regime, had been a significant factor in the trading surge.

"Telecom represents a considerable part of any particular day's value and volume. That will be an influence, obviously," he said.

"More volatile leaders will ultimately be reflected in bigger trading activity for us."

The day after Cunliffe's announcement more than 81 million Telecom shares with a combined value of $408 million changed hands - equivalent to about three times the entire New Zealand market's average daily turnover. The stock traded heavily for the rest of the month.

Cunliffe's subsequent comments on the company's dividend outlook and chief executive Theresa Gattung's remarks on the use of confusion as a marketing tool also fuelled trading in the following days.

The NZSX-50 index ended the month on 3614, a 19 per cent increase since May 2005 but a 4.8 per cent decrease since the end of April. Telecom's share price declined from $5.73 at the start of May to $4.49 at the end of the month reducing its market cap by $2.4 billion, which dragged the bourse's capitalisation from $65.67 billion in April to $63.28 billion in May.

Brown cited a faster-than-expected depreciation in the dollar as a factor stimulating renewed interest in equities, particularly from retail investors. The recent listings of Rakon and Delegat's had also stimulated interest.

At the NZAX alternative market, trades by volume were up 134 per cent on the same period a year ago and 61 per cent up on April. By value, NZAX trades at $10 million for the month were 186 per cent ahead of last May and 40 per cent ahead of April.