Rewarding year on NZ sharemarket

Greg Easton.
Greg Easton.
More investors are expected to pile into shares this year as returns from fixed-interest investments remain low.

Investors who kept faith with the New Zealand sharemarket last year were richly rewarded, with only two NZX-50 companies failing to make a positive return during the year.

The top three performers - Diligent, Xero and Pumpkin Patch - provided their returns of 183.4%, 175.4% and 107.8% respectively on share price growth alone, as none of the three paid a dividend during the calendar year.

Craigs Investment Partners broker Greg Easton said there were good returns for investors.

''Fortune favoured the brave. There were some good returns for those who were looking for a bit extra.

''New ideas started to find traction with investors.''

There was a push for companies not on the NZX-50, such as Dunedin's Pacific Edge (up 179%), A2 Corp (up 125%) and Scott Technology (up 72%.

In the case of Scott Technology, the rise in returns came from the fruition of a long-held strategy. Pacific Edge and A2 were rewarded as investors started to recognise that years of hard work on research and development were starting to pay off, he said.

Burger Fuel was an ''interesting company''. It had started to make money and Milford had recently bought into it. When companies like Milford took a stake, the shares usually received a ''bit of a nudge'', Mr Easton said.

During the last half of 2012, there had been a noticeable increase in the number of investors entering the sharemarket looking for yields.

''Also, speculators started turning up again. We haven't seen them for three or more years but they have been very active again.

''It was a good second half. In fact, it all happened in the second half. The market had done nothing until June.''

Asked for a prediction for this year, Mr Easton said the world was trying to ignore the US, as much as it could.

''We have been through the process before with the debt ceiling talks. Eventually, they will come to some agreement.

''US markets have been appalling in the last two weeks but I have just looked at Shanghai and they have had one of the best months for ages - up 10% last month.''

Europe was starting to outperform as investors, like those in New Zealand, started to look for personal income gain through investments, Mr Easton said.

The only two negative returns on the NZX-50 last year were provided by Chorus (down 6.7%) and Cavalier Carpets (down 13%).

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