KEY POINTS:
The sharemarket shrugged off concerns about New Zealand's economic health to hit a fresh high yesterday, powered by the growing tide of local and international cash looking for a home.
Although it ended the day down 3.7 points at 4202.58, the sharemarket's benchmark NZX50 index traded up to 4223.3 early yesterday afternoon - its highest point.
First NZ Capital Research manager Barry Lindsay said there were several measures suggesting share prices on the local market were relatively expensive at present by historical standards.
However, although history would suggest the market should be weaker there were some special factors at play underpinning gains.
"There's more money chasing equities than is wanting to depart the market," Lindsay said. That included cash from international investors, attracted by the relatively high dividend yields of New Zealand companies, and money from domestic investors.
The flow of money from locals was set to continue if not strengthen thanks to factors such as the new tax treatment of portfolio investment entities, the introduction of KiwiSaver, and the continued growth of the New Zealand Superannuation Fund.
The fund is now worth $12.46 billion and holds close to $1 billion in New Zealand shares.
Meanwhile there were few companies coming on to the market to provide fresh supply, said Lindsay. "With the exception of New Zealand Windfarms, there are no new issues on at the moment, but there's more in the way of stocks being removed."
Stocks under threat of being taken over and delisted included Tourism Holdings and Software of Excellence.
ABN Amro Craigs broker Matt Willis believed the market was "wrapped up" in a "global liquidity phenomenon".
Listed companies were not immune from the economic challenges facing the wider economy, but the fact that listed companies remained relatively unaffected, was probably a glowing endorsement of how they were being run.
