CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

New Zealand Stock Exchange: Best Stock Picks for 2019

By Capital.com Research Team

14:04, 25 September 2019

New Zealand Stock Exchange

What do you know about New Zealand economy? Aotearoa, or the Land of the Long White Cloud, continues to attract a significant portion of foreign investments thanks to its friendly business environment and robust economy. The positive investor sentiment is reflected in its steadily growing capital markets. 

New Zealand Stock Exchange

The first New Zealand Stock Exchange was established in Dunedin in 1866. The initial shares belonged to gold mines during the gold rush of the 1870s. The exchange greatly contributed to the development of many important institutions, including banks, insurance, shipping and freezing companies.

Further local exchanges were opened in Auckland, Thames and Reefton in 1870s, Wellington in 1882 and Christchurch around 1900s. They all performed independently until 1915, when the New Zealand Stock Exchange Association was formed. 

In 1991 the New Zealand Exchange closed its regional trading floors and implemented screen trading. In 2002, it has officially changed its name to NZX exchange.

NZX exchange mainly operates equity, debt, derivatives and energy markets. Supporting the development of its core markets, it offers trading, clearing, depository and data services. 

As of April 2019, the NZX had 164 listed securities in total with a market capitalisation of $147.8 billion.

What is your sentiment on EA?

132.82
Bullish
or
Bearish
Vote to see Traders sentiment!

New Zealand stock market outlook

In 2019, the New Zealand stock market has continued to outperform its close competitors amid the growing global uncertainty. The NZX 50 index, a benchmark New Zealand stock exchange index that measures the performance of the New Zealand stock market, has grown by 24.52% since January, according to Trading Economics. The trend is expected to continue to the end of the year.  Trading Economics further reports that foreign direct investments in the New Zealand stock market reached an all-time high in the second quarter of 2019. 

According to a 2018 report by the World Bank, New Zealand is the world’s best place to do business. The country has a tax regime that encourages global competitiveness coupled with an infrastructure that reduces the cost of doing business. This is evident in its economy, which has maintained a positive growth streak for the last 33 years.

A report by FocusEconomics predicts that the New Zealand economy will maintain a 2.5% annual growth up to 2020. While this is not groundbreaking, it is better than the EU, which is expected to grow by 1.4% in 2019 and 1.6% by 2020.

New Zealand boasts a industrialized free-market economy powered by a highly friendly regulatory environment. The industrialization has enabled the country to increase production and expand its exports to new markets in South East Asia. Likewise, the favorable business environment continues to attract foreign direct investments mostly from the US, Europe, and Asia.

New Zealand shares

The bottom line is a blossoming stock, debt, and currency markets as businesses continue to expand and explore new opportunities.

How to invest in New Zealand? Capital inflows from uncertain markets

The capital inflows in New Zealand appear to increase with the rising uncertainty in the US, the UK, and China. While the UK is grappling with Brexit, the US is suffering from its trade wars with China.

Likewise, the ongoing anti-government protests in Hong Kong have propelled capital flight to neighboring countries, including Australia and New Zealand. Reuters reports that the demand for real estate in these two countries has soared since the start of the political tension in Hong Kong.

But Australia is also facing challenges of its own with a stagnating economy and rising unemployment. This means that New Zealand remains to be the top destination for investment. The New Zealand Dollar remains strong and is expected to rise against the USD and the GBP in the coming months.

BTC/USD

70,924.50 Price
+2.790% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

Gold

2,221.59 Price
+1.210% 1D Chg, %
Long position overnight fee -0.0188%
Short position overnight fee 0.0106%
Overnight fee time 21:00 (UTC)
Spread 0.50

XRP/USD

0.63 Price
+2.330% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

ETH/USD

3,568.64 Price
+1.400% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

According to analysts at TD Securities, the NZD is the most undervalued in G10 currencies. Consequently, it is bound to make exports more profitable hence attracting more foreign direct investments. As is expected, the USD, the GBP, and the Yuan remains mostly unattractive with the rising political heat in respective countries.

Invest in New Zealand: NZX shares to watch in 2019

New Zealand stock market is prone to the short-term volatility resulting from the uncertainties in the markets around it. However, it is likely to maintain steady growth in the long term, unlike its stagnating competitors.  As a result, this is the best time to buy for value investors. Speculators, on the other hand, may not gain much, given that the country is prone to short-term ripple effects from the uncertain global markets. The following are the top New Zealand stocks to invest in 2019.

City of London Investment Trust

The CTY Trust is listed in both the London and New Zealand stock exchanges and comprises of shares listed on the London Stock Exchange. Even with the uncertainty surrounding the UK markets, experts still believe that this could be the best buy.

For the last 27 years, the fund has been under the management of Job Curtis, a highly experienced portfolio manager. Curtis believes that the fund will sail through the Brexit uncertainty by investing in long term growth stocks with a global touch. 

 New Zealand stocks

CTY has a track record of paying consistent dividends and is expected to pay higher in the coming years. According to Money Observer, CTY shares have produced an excellent yield of 4.8% paid quarterly. CTY is among the best performing low-cost funds you will find on NZE.

Ebos Group Limited

Ebos Group Limited is our top pick for the best New Zealand shares to buy in 2019. While the stock may appear pricey, it still has room for growth. Yahoo Finance reports that this stock has a P/E ratio of 24.7, which is above its market average of 18.6%.

A higher P/E ratio indicates that the markets believe that the stock will perform better than industry peers. While the stock may appear highly-priced, it is a cheap buy compared to the expected future earnings.

Also worth noting, Ebos Group Limited is a good dividend payer with a 12-month payout ratio of 73%. It has a steady cash flow relative to earnings meaning that its dividend payments are sustainable. This stock has been paying dividends consistently for the last ten years.

According to simply wallst, Ebos Group Limited has a forecasted annual earnings growth of 8.3%. This is below the projected industry average of 11.5%. 

Smartshares NZX TOP 50 ETF

Smartshares NZ Top 50 ETF is another top New Zealand fund worth considering. The fund replicates the NZX 50 Portfolio Index which comprises of the securities of the top 50 companies on the NZX market. Consequently, the fund has a strong correlation with the New Zealand economy.

The fund has maintained a dividend yield of 3.64%, which is considerable, given its revenues and projected growth. Smartshares NZX top 50 ETF charges a small management fee of between 0.33% and 0.75%.

Bottom line

The New Zealand economy is bound for explosive growth, meaning that this is one of the best places to invest in. Named the No.1  in the world for ease of doing business by the World Bank in 2018, the country gained $876 million for New Zealand private equity and venture capital. Learn more about investing in New Zealand today and make your own picks for the rest of the year.

Photo: ChameleonsEye/Shutterstock

Markets in this article

CTY
City Of London Investment
4.072 USD
-0.025 -0.620%
CTY
City Of London Investment
4.072 USD
-0.025 -0.620%

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 580.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading