With the September quarter coming to a close last weekend the results from the various offshore sharemarkets confirm that New Zealand has been a great place to be over the past quarter and in the 2012 year.
The NZX Gross 50 Index was up a whopping 12.8% for the 3 months ending 30 September and 17.1% for the 2012 calendar year to date.
While overseas sharemarkets produced reasonable results a strong Kiwi dollar did potentially impact on returns for a NZ based investor. For example the US sharemarket (S&P 500) was up 5.8% in local currency for the quarter but only 2.1% in NZ dollar terms. Likewise the Australian market return for a New Zealander was affected by currency with the ASX200 up 8.8% for the quarter in local currency and 6.5% in NZ dollars.
These figures confirm that investors are increasingly seeing the New Zealand sharemarket as a safe haven investment location. While not buoyant our economy appears relatively sound compared to most developed countries, being boosted by strong soft commodity prices and the Christchurch rebuild starting to gain some momentum.
Moreover New Zealand companies have generally adjusted to the low growth/recessionary environment of the past few years and are well placed for any domestic economic pick-up. Many New Zealand companies also provide reasonable dividend yields, an important positive factor in a yield hungry world.
As we have seen over the past year when sentiment becomes more positive in this country it does not take much to move the small New Zealand sharemarket. It would need a major reversal in global sentiment or some shock to our economy for its recent gains to be reversed.