New Zealand managed funds' slice of the sharemarket at highest level for at least 14 years, Goldman Sachs says

New Zealand managed funds' slice of the sharemarket at highest level for at least 14 years, Goldman Sachs says

Boosted by KiwiSaver, money invested in the sharemarket that's managed by New Zealand fund managers is at its highest level in at least 14 years, according to Goldman Sachs.

In its latest annual survey of New Zealand sharemarket ownership Goldman Sachs says NZ Managed funds' slice of the equity market pie rose 1.9 percentage points to 22.3% in the year to June 30, from 20.5% a year earlier. That's its highest level since investment bank Goldman Sachs initiated its survey in 1997 when the NZ managed funds' equity market share was just 14%, analysts Bernard Doyle and Anthony Cheong say.

"We continued to witness strong managed funds inflow from KiwiSaver, total funds under management of NZ$9.4 billion as at 30 June 2011, up 63% from NZ$5.8 billion in the previous corresponding period," say Doyle and Cheong.

They also say the amount of KiwiSaver money invested in NZ equities rose "an impressive" 59% to NZ$900 million from NZ$569 million.

That said, the percentage of total KiwiSaver money invested in NZ equities as a percentage of total KiwiSaver in managed funds is down to 9.6% from a peak of 10.5% in the December 2009 quarter, although the potential partial float of some State Owned Enterprises, should the National Party be returned to power in November's general election, could increase the percentage of KiwiSaver inflows into New Zealand equities, Doyle and Cheong add.

Meanwhile, participation by retail, or mum and dad, investors in the sharemarket rose to 22.3% from 22.1%, which is consistent with levels seen from 2000 to 2005.

"We suspect that as KiwiSaver continues to build momentum, there will be further substitution of direct holdings to managed funds."

Foreign ownership of the NZ equity market was down slightly, year-on-year, to 35.9% from 36.1% but still high by international standards. NZ strategic stakes fell 1.9 percentage points to 19.5% and foreign strategic stakes dropped 0.4 percentage points to 12.8%.

See our story here from last year on Goldman Sachs' 2010 survey of sharemarket ownership.

And see this Double Shot interview where Bernard Doyle discusses whether the NZX is in God's waiting room.

 

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And it's only the fund managers (and their serfs) that are calling for the NZX to have a larger share of GDP (how it has any bearing is beyond me). 

 http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10749653

If the unlisted sector is performing isn't that just as good for "the economy"?  Who really makes the money from having a larger capital market?  Aside from a new share offer what benefit is provided by the buying and selling of shares to each other - it's effectively a neutral transaction.

The sharemarket acts as a conduit for capital flows , allowing companies to raise money through bond issuances , or through floating a proportion of the business as ordinary shares .

....... the company gets the cash that it requires for expansion , and individuals get the oppotunity to share in the success ( or otherwise ) of the business .

Economically balanced countries usually have a robust local stockmarket .

... as a former Christchurch Press employee , it irked me no end that our proud newspaper had been taken 100 % by Independent News , and later flogged off to Fairfax .... all the profits going offshore , instead of dividends being available to local investors , as it was previously

 ...... and what benefit did the Australian owners give to the Chch Press ? .. none !..  In fact , our local papers ( the Dominion in Wellington , too )  and Trademe are nothing more than cash-cows , helping the Australian owners clean up their  hugely indebted balance sheet ....

A strong NZX would be indicative of a healthy NZ economy .

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