KEY POINTS:
Wild swings in sharemarkets around the world in the past six weeks are thought to be responsible for a sharp fall in activity on the New Zealand stock exchange.
The total value traded on the NZX last month was down 57 per cent on November 2007 to $1.45 billion, while the total number of trades dropped 25 per cent to 41,569.
The fall on the main sharemarket, the NZSX, in the value traded was a whopping 84 per cent, taking the amount down to $1.33 billion. But on the NZDX debt market, the value traded rose 20 per cent to $122 million.
By the end of November the benchmark NZX-50 index was down 33 per cent from a year earlier to 2711 points.
The November figures also show new capital raised in the month was a paltry $6 million, taking the figure for the year so far to $2.83 billion, with new equity up $4 million to $880 million and new debt up $2 million to $1.95 billion.
NZX market development manager Geoff Brown, after pointing out October was the best month in five years for the number of trades, said volatility was the likely reason many investors were "sidelined" in November.
For the previous six months, the pattern was for the numbers of trades to be quite healthy but values were either flat or falling, so the average size of trades had fallen considerably, he said.
In this country the sharemarket was probably more resilient than most and less volatile, but globally markets had been moving by up to 7 per cent a day, which was previously unheard of.
"Usually quarters or half years would show that degree of volatility, but not days of trading, and that's I think really what's [making] people just very wary of the equities market globally at the moment," Brown said.
Investors would be looking for an improvement in expectations of the underlying performance of companies, following a period of earnings downgrades for many businesses.
The "very low" figure for capital raising in November came after a reasonable first half of the year to June which was about the equivalent of the record 2007 year, he said.
During November debt raising was affected by listed issuers' uncertainty about the Government's deposit guarantee scheme.
On the equity side, low share prices would have made raising additional capital unattractive.
Brown said he expected capital raising figures for December to be healthy, with several organisations indicating they were prepared to raise money as interest rates fell.
NZX's revenues were affected by the decline in activity. Most of the income in trade fees was generated on the number of trades, with the impact on revenues of the fall in the value of trades only marginal.
The November figures show a much sharper decline in value for the NZX than was apparent a month earlier. In October the total value traded on the NZX was down 20 per cent to $2.14 billion, while in the September quarter the decline was 14 per cent to $7.94 billion.
BLEEDING
* Total value traded last month down 57 per cent compared with November 2007.
* Total number of trades down 25 per cent.
* NZX-50 down 33 per cent compared with a year earlier.
- NZPA
