Trading on the NZSX was sluggish last month amid signs investors were switching money into better performing overseas markets including Australia and positioning themselves to benefit from the long-awaited fall in the New Zealand dollar.
While the benchmark NZSX 50 index ended January 9 per cent higher than at the same time last year, the market's underlying capitalisation was down 3 per cent at $63.02 billion or 41 per cent of GDP.
There were 35,471 trades during January on the NZSX, down 15 per cent on a year earlier, and their combined value of $1.9 billion was down 2 per cent.
"Whilst January is typically a slow month, there has been a significant drop in trades compared with last year," said NZX head of finance and strategy Carl Daucher.
"The high level of the NZ dollar is having an undoubted impact on our markets, and there are numerous media reports saying many advisers are placing money in overseas investments at present. This is part of the normal economic cycle and, as the dollar drops in value, investors look to local markets."
Yesterday, First NZ Capital research manager Barry Lindsay said private client investors appeared to be investing more money offshore with the first port of call being Australia, where booming resource stocks continued to do well.
"My sense isn't that they have actually said, 'Sell my New Zealand stocks, I'm getting out of here'.
"A few would have done that but I don't believe it's on a large scale at all."
AMP Capital Investors senior portfolio manager Peter Scobie said relative to its benchmarks, AMP was 2 per cent underweight in domestic equities and 3 per cent overweight in global equities. Its portfolios had been positioned that way around for a number of months.
"We think NZ equities will have a flatter period of performance relative to global."
Scobie also said a fall in the New Zealand dollar would be a "definite benefit" for local investors with unhedged overseas equity investments.
Meanwhile, on the NZAX alternative market, trades were up 99 per cent by number and 353 per cent by value at $7 million for the month. The NZAX's capitalisation rose by 30 per cent to $644 million.
On the NZDX debt market, trading volumes rose by 24 per cent but their value fell by 20 per cent.
NZSX suffers as kiwi on brink
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