Question

NZ share market

-    Present an overview of the NZ share market. You may want to look at the size, turnover rate, major index, relative performance as compared to AU and US, market trend, etc;

-    Discuss how NZ share market help the real economy.

Answer 1

Answer :

New Zealand Stock Exchange is the 87th largest exchange out of the 144 stock exchanges we track. The primary currency used by the New Zealand Exchange is the New Zealand Dollar ($).

Meaning: The securities market in New Zealand. The New Zealand Stock Exchange (NZX), based in Wellington, consists of the New Zealand Alternative Market, the New Zealand Stock Market and the New Zealand Debt Market.

Purpose: is to offer secure, liquid investments and opportunities for individuals and companies.

Originated: It originated in New Zealand's 1870s Gold Rush, when the country's four biggest gold mines served as financial centers and each had its own exchange.

It wasn't until 1974 that these entities merged to form the contemporary New Zealand Stock Exchange.

In 2003, the NZX officially became a limited liability company, with its new name being the New Zealand Exchange Limited. Since 2003 ownership and control of the exchange had been with the shareholders, with brokers taking on the role of market participants.

Consists: It consists of the NZX Main Board (NZSX), NXT Market (NXT), NZX Alternative Market (NZAX), NZX Debt Market (NZDX), NZX Dairy Derivatives, NZX Equity Derivatives (NZCX), Fonterra Shareholders Market (FSM) and S&P/NZX Indices.

Performance:

The NZX 50 increased 2243 points or 25.69% since the beginning of 2019, according to trading on a contract for difference (CFD) that tracks this benchmark index from New Zealand. Historically, the New Zealand Stock Market (NZX 50) reached an all-time high of 11222.31 in September of 2019 and a record low of 1665.04 in September of 2001.

The big investors had shared their experience and said that :

"The savings options that the NZX facilitates are at a much lower cost, and offer much greater scope for diversification of risk, than normal direct investments in private businesses or property," NZIER said.

"This is of vital importance in the context of the unbalanced nature of most New Zealand household balance sheets with their very high exposure to residential property, occupied or rented."

The report reinforced NZX's strategic decision to refocus on its core markets business and deliver initiatives to widen participation, grow an investable product, deepen liquidity and expand the market's global presence."

How it helps to the real economy:

The NZX operates within a regulatory framework designed to maximize transparency, fairness, efficiency and competitiveness, and promote confidence among all participants. Under NZX rules, all companies are required to disclose information that is material to the value of their shares as soon as the companies become aware of that information.

New Zealand has a range of security laws regulating how investments are offered to investors, and how advisors should conduct themselves. The main thrust of these laws is to protect investors by requiring issuers to disclose the information investors need to make informed decisions, and by requiring advisors to put investors' interests first.

Also, it provides :

• Corporate companies' growth: The company gets the funding by selling a part of the ownership to the public. This helps the company to work on its plans and expand the business. An expanded business means more goods/service to the society
• Investor growth: It provides frequent buy-sell of the stocks take place. When traders/investors get profit from the stock market they have more money to spend and when they are at a loss they have lesser money to spend
• Helping government: where the government gets the money for the project and the public gets an assurance of an increase on their investment in the bonds.
• Bank and institutions: It play a very important role to keep a nation’s financial status stable. The stock market keeps them alive and healthy, thus impacting the economy of a country.
• Mobilizing Savings: It opened a new world of saving options for common people
• Economic barometer: A continuous healthy condition attracts more investment from local and foreign investors. In turn, increases the economic health of a country.