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Equity trading jumps in NZX cash market, NZX 50 nears five-year high

Share trading on the NZX jumped by more than a fifth in November, a month that saw the benchmark NZX 50 Index rally to near its highest level in five years, helped by KiwiSaver contributions and offshore demand for higher yields.

Total trades on NZX's cash markets climbed 21% to 80,894 last month from a year earlier to $3 billion, or an average $138 million a day. Trading in equities jumped 24% to 77,938, while trading in debt securities fell 21% to 2956. The value of debt trading fell 47% to $84 million.

The value of equities on the NZX rose about 20% to $65.9 billion, or 32% of gross domestic product in November. The market capitalisation of debt securities fell 5.1% to $14.7 billion, or 7.1% of GDP.

Demand for New Zealand equities has been growing as a world with near-record low interest rates make the dividend yield available on local stocks more attractive.

For example, Telecom is trading at a dividend yield of almost 13% and Goodman Property Trust is at 8.3%. By contrast, two-year term deposits in New Zealand offer around 4.35%. US 10-year Treasuries are yielding 1.61%.

The NZX 50 Index closed yesterday at 4015.694, slipping for a second day from the highest level since December 2007.

Total equity securities listed on the NZX fell 0.6% from a year earlier to 169 and debt securities fell 8.5% to 97. There was $166 million of equity capital raised last month, of which $36 million was for dual-listed or secondary listed companies.

There was $59 million of debt raised.

Shares of NZX last traded at $1.21 and have gained 26% this year.