Vector and CHH made for an active month on the sharemarket

Turnover on the main sharemarket rocketed last month, boosted by the Vector IPO, activity around Graeme Hart's purchase of a controlling stake in Carter Holt Harvey and the corporate reporting season.

Market operator NZX said yesterday that 59,961 transactions had occurred on its NZSX-50 main board during August, worth $3.039 billion - an increase of 11 per cent on the same month last year by number and a leap of 38 per cent by value. Compared with July, value of turnover was up 10.23 per cent.

NZX finance and strategy head Carl Daucher said an increase in activity in August - the main part of the reporting season - was to be expected. However, trade was also spurred on by the $592.6 million Vector initial public offering (IPO).

The Auckland lines company's market debut was the biggest listing by a New Zealand company on the NZSX since Contact Energy's $1.12 billion IPO in 1999.

Since Vector's August 15 listing, there have been 4925 trades in its stock worth $125 million, or just under 5 per cent of the NZSX's total August turnover.

Daucher said the other component driving trade higher on the NZSX was activity around CHH. Hart agreed on August 17 to buy International Paper's 50.1 per cent controlling stake in CHH in a deal that values the company at $3.27 billion.

"Obviously, a lot of investors were trying to figure out what was going to happen there and when the deal did get announced quite a bit of trading activity immediately followed," said Daucher.

Aside from particular events, Daucher said NZX was seeing "a higher level of value being traded on a consistent basis throughout the year" on the main board.

Another feature of the month's trade was the increasing popularity of instalment warrants. Trade in the products, which allow investors to buy shares on "lay-by" basis, increased by 59 per cent compared with July.

The instalment warrants traded on the NZSX are offered by investment banks ABN Amro and UBS. Investors pay a fraction of a stock's total price and the issuer of the warrant then funds the purchase of the full share over time using dividend revenue.

The overall capitalisation of the NZSX at the end of August was $66 billion, representing 45 per cent of New Zealand's gross domestic product (GDP). Daucher said most countries' sharemarkets had capitalisation equal to their annual GDP.

"We feel that represents potential for more of the economy to be represented as publicly listed entities."

Meanwhile, over on the NZAX alternative exchange, the number of transactions for the month was down 9 per cent on August last year to 577 but their value was up a smidgen to $3 million.

All but one of the transactions were worth less than $50,000.