How to buy stocks that are trending in the right direction


New Zealand’s stock market has been on an upward trend, according to a new analysis.

The country’s benchmark index, which measures the performance of NZ’s biggest companies, has gained 4 per cent in the past six months and was up more than 6 per cent at the end of August, according a report by the consultancy firm RBC Capital Markets.

It follows a 4.6 per cent rise in the benchmark index in the 12 months to July, which was down from 4.8 per cent growth in the previous 12 months.

It is the first time in NZ’s history that the benchmark has grown at double-digit rates.

The latest gains are likely to continue, the report said, because the economy is improving and a recovery is under way.

The biggest gainers have been NZ’s two biggest companies: Nvidia and the Australian company Corus.

Corus is also expected to post a profit for the first half of this year, while Nvidia is on track to post its best quarterly results since it was founded in 2006.

The rise in NZ stocks has also been fuelled by a fall in the value of the dollar.NZ’s currency, the NZD, has fallen by more than 50 per cent against the US dollar since July 1, meaning that many NZ businesses are now using US dollars instead of New Zealand dollars.

The report also said the country’s stock markets are seeing a shift away from the tech sector, with many stocks in the technology sector having seen their value fall by more then 30 per cent since June.

While some of the stocks in that sector have regained their market value, there has been a noticeable fall in other sectors such as healthcare, mining and financial services, which are also benefiting from a recovery in the economy.

New Zealand stock market is up 3.8pc since July, according RBC Capital Markets report.

The stock market index is up 9.2pc in the last 12 months.(Supplied: RBC)”As investors are increasingly turning their attention to the sector of the economy, this will likely lead to an upward momentum in NZ stock prices, with more investors taking advantage of the lower volatility,” the report noted.

The Government has been trying to address the slump in the stock market, with the Reserve Bank increasing its overnight lending rate by 25 basis points.

The government is also planning to introduce a 3 per cent tax on foreign capital gains, which would be levied on the highest earners, who make up around 60 per cent of all capital gains income.

The Reserve Bank also cut interest rates, but this was a gradual change, with it reducing the rates by 0.25 percentage points over three years.

A more dramatic move was the removal of capital gains tax from the GST. 

The Government also announced a number of tax breaks for businesses, including the doubling of the maximum tax rate from 14.5 per cent to 28 per cent. 

But there is still a long way to go to regain momentum, with no signs of a turnaround in the recovery.

, , , ,