Short Selling in NZ

[epower]

Came across this today

https://i.stuff.co.nz/business/industries/86021186/the-small-short--how-to-bet-on-a-falling-market

Anyone doing or done short selling on the NZX on Sharetrader?

Love to hear your story on it

[stoploss]

I Use CMC markets to short shares , CFD ( contract for difference )

[SBQ]

Came across this today

https://i.stuff.co.nz/business/industries/86021186/the-small-short--how-to-bet-on-a-falling-market

Anyone doing or done short selling on the NZX on Sharetrader?

Love to hear your story on it

As in the article, going short on NZ equities is rare. Hell I tried to enter short positions on NAKD which trades on the Nasdaq and TDAmeritrade didn't have any allocated shares to lend.

The issue is not that one can go short but rather, more to do with the broker you choose. Even more concerning, the particular stock you're betting against and what liquidity would it offer in order to close your position (something I doubt the NZX is really capable of offering). Any broker, in order for them to allow their clients to take short positions requires them to find someone (another broker or major client) willing to LEND those shares. As energetic these trades are in the US equities, there are still limitations due to again, which broker you trade with. The big boys that take short positions usually don't mingle with the small retail market (just like in the IPO sense). Meaning your order to short goes unnoticed and unfilled ; while the key players that do - do so off the record.

The article also says regulations say you can't stay in short position for long. Such as when dividend dates are declared meaning you have to close your position before then. These regulations by the NZX make any proposition to profit even more riskier. Yet from the basic eye - long term majority of NZX listings go bust. This is to protect overseas brokers from hammering on the NZX and raping it knowing that so many small listed NZX companies go bust ; so naturally there will be more regulations on the NZ end of things.

With high commissions and slow executions of trades, why do you want to mess playing on the NZX by going short?

[stoploss]

As in the article, going short on NZ equities is rare. Hell I tried to enter short positions on NAKD which trades on the Nasdaq and TDAmeritrade didn't have any allocated shares to lend.

The issue is not that one can go short but rather, more to do with the broker you choose. Even more concerning, the particular stock you're betting against and what liquidity would it offer in order to close your position (something I doubt the NZX is really capable of offering). Any broker, in order for them to allow their clients to take short positions requires them to find someone (another broker or major client) willing to LEND those shares. As energetic these trades are in the US equities, there are still limitations due to again, which broker you trade with. The big boys that take short positions usually don't mingle with the small retail market (just like in the IPO sense). Meaning your order to short goes unnoticed and unfilled ; while the key players that do - do so off the record.

The article also says regulations say you can't stay in short position for long. Such as when dividend dates are declared meaning you have to close your position before then. These regulations by the NZX make any proposition to profit even more riskier. Yet from the basic eye - long term majority of NZX listings go bust. This is to protect overseas brokers from hammering on the NZX and raping it knowing that so many small listed NZX companies go bust ; so naturally there will be more regulations on the NZ end of things.

With high commissions and slow executions of trades, why do you want to mess playing on the NZX by going short?

SBQ can you substantiate " long term majority of NZX listings go bust."

[Ferg]

As in the article, going short on NZ equities is rare. Hell I tried to enter short positions on NAKD which trades on the Nasdaq and TDAmeritrade didn't have any allocated shares to lend.
Thanks for sharing your thoughts.

Per here it appears there are shares available for NAKD:
https://iborrowdesk.com/report/nakd

but from what you are saying, these shares might not be available to retail investors, depending on your broker. Is that correct?

[SBQ]

SBQ can you substantiate " long term majority of NZX listings go bust."

Well just look at the composition of the NZ50 index and compare how many of those companies existed 50 years ago? How many 20 or 30 years ago? Go over in the US equities and compare - if any large cap drops out or nearly goes bust, they become a buy out target (can't say the same for many NZ listings - even successful ones like Xero simply abandon the NZX for ASX. Sure there are some large caps that go bust such as Enron but the bottom line is 'quality'. Then there's the issue of listing requirements where the NZX is far more slack that favour the insiders more than the retail investors. Then add the nonsense that NZ shareholders expect dividend payments (despite keeping the profits within the company would generate higher share prices which are tax free capital gain vs dividend payments triggering a tax liability) is beyond me. No wonder investments like the TWG have no capital gains - perhaps a loss when inflation adjusted.

@ Ferg:

That chart is meaningless. As I said before, it's highly broker dependent on what shares you can take a short position. Even a large broker like TDAmeritrade (which is larger than any NZ/Aus broker; would not have large holdings of 'borrowed shares' of such companies says enough. This is the stuff that the NZ FMA is entirely clueless when advising the public about finance and investing. Just look at their negative statement about options and derivatives in a way that 'scares' people when it comes to investing. You know there is a big difference between Robin Hood platforms and well.. your dinky Sharesies / Hatch platform. But the FMA touts these foreign brokers as risky and oohh scary because they allow derivative trades. FYI, the FB FMA has muted me as i've made these statements on their FB page (yes the truth hurts).

Anotherwords, those that are in the serious business of shorting are in a different class altogether. They have a broker that is 'able' to find someone willing to lend their shares in the company they want to go short on ; and it's not just any broker, it's the relationship they have where the broker gives preferential treatment to them. The small guy is simply out of luck.

The unique thing about Robin Hood is they have clients that are stupid enough to make risky bets which opens their landscape for wild west investing. Therefore, they're able to find enough shares to borrow for their clients that want to go short. I can't imagine any broker who does not offer options and derivatives, are able to also offer short positions as both practices are somewhat related in creating such trades.

[stoploss]

SBQ,
just because we have new listings in the NZX over the past 20 years doesn't mean the companies that were there before have gone bust .
Also if a company ( MET) as an example is taken over doesn't mean it went bust .
Your quote was "Majority of NZX listings go bust "- can you just admit that is a gross inaccuracy , and put your shovel away or provide us some examples if you think this statement is correct.
BTW, still waiting for you to provide the examples of " most major banks in NZ don't deal with Mortgage brokers "
Here is an article comparing the top 10 - 2008 to 2018 , None of these has gone bust and most have been around 30 years...
https://milfordasset.com/insights/largest-companies-2008-vs-2018-lot-changed

"Well just look at the composition of the NZ50 index and compare how many of those companies existed 50 years ago? How many 20 or 30 years ago? Go over in the US equities and compare - if any large cap drops out or nearly goes bust, they become a buy out target (can't say the same for many NZ listings - even successful ones like Xero simply abandon the NZX for ASX. Sure there are some large caps that go bust such as Enron but the bottom line is 'quality'. Then there's the issue of listing requirements where the NZX is far more slack that favour the insiders more than the retail investors. Then add the nonsense that NZ shareholders expect dividend payments (despite keeping the profits within the company would generate higher share prices which are tax free capital gain vs dividend payments triggering a tax liability) is beyond me. No wonder investments like the TWG have no capital gains - perhaps a loss when inflation adjusted."

[SBQ]

SBQ,
just because we have new listings in the NZX over the past 20 years doesn't mean the companies that were there before have gone bust .
Also if a company ( MET) as an example is taken over doesn't mean it went bust .
Your quote was "Majority of NZX listings go bust "- can you just admit that is a gross inaccuracy , and put your shovel away or provide us some examples if you think this statement is correct.
BTW, still waiting for you to provide the examples of " most major banks in NZ don't deal with Mortgage brokers "
Here is an article comparing the top 10 - 2008 to 2018 , None of these has gone bust and most have been around 30 years...
https://milfordasset.com/insights/largest-companies-2008-vs-2018-lot-changed

"Well just look at the composition of the NZ50 index and compare how many of those companies existed 50 years ago? How many 20 or 30 years ago? Go over in the US equities and compare - if any large cap drops out or nearly goes bust, they become a buy out target (can't say the same for many NZ listings - even successful ones like Xero simply abandon the NZX for ASX. Sure there are some large caps that go bust such as Enron but the bottom line is 'quality'. Then there's the issue of listing requirements where the NZX is far more slack that favour the insiders more than the retail investors. Then add the nonsense that NZ shareholders expect dividend payments (despite keeping the profits within the company would generate higher share prices which are tax free capital gain vs dividend payments triggering a tax liability) is beyond me. No wonder investments like the TWG have no capital gains - perhaps a loss when inflation adjusted."

Don't take my word for it. Just ask the average Kiwi about share investing and they tell you nightmare stories of Brierley Investments or more recently, how about Hanover Finance? When the general public has no confidence on the NZ sharemarket and instead, the NZ gov't has to rely on pushing Kiwi Savers as a way to prop up the NZX, and the absence of international investors wanting to buy NZ shares, then my statements are not that far off. No response on the above facts highlighted in red italics and the reason why? You do know things like recently, My Food Bag that float on the NZX benefit 1st the insiders ; which is more likely the culture of most listed NZX companies in the past gives very little confidence to the small retail investor. The FMA will never duly report the ins and outs of this and make fair comparisons to say US equities.

Several years after the 2008 GFC, I compared the NZX50 index cumulative returns to the S&P500 and ^DJI ; by a long shot the NZX lagged far behind. If NZ shareholders insist on some silly dividend payment program, which makes them pay more taxes vs keeping the profits in retained earnings, then it's no wonder the cumulative returns of the share price on the NZX is not going to be hot. Compare that to the returns of owning Auckland houses over the past 20 years? The people are not dumb in NZ ; they know a leveraged investment in NZ houses in the past and present, is still the best game in town.

What is lacking in the NZ investment & finance is education. Ever since I was a child growing up in Canada, daily afternoon they had TV talk on how to invest or save for retirement. How to minimise your taxes and claim valuable credits on your tax return. The most that i've seen in NZ is a bit of biased talk by the NZ FMA on FB feeds and other Kiwi Saver funds - but none that fully education on the tax implication. Just have a look at the Finance news in America, all CFPs advise clients from a tax minimisation point of view FIRST.

We're getting a bit off topic here. The key issue is nothing is fair in finance. Even worse, in NZ is more unfair as the brokers in NZ operate much like brokers did in Canada back in the 1980s.

[stoploss]

SBQ, Stop changing the subject .How about answering my question about your bold statement ......
Hanover to the best of my knowledge wasn’t listed onthe NZX.
So be brave and admit , most NZX companies Don’t go bust .
Most of my Kiwisaver fund us in offshore equities ,so not propping up the NZX.

[SBQ]

SBQ, Stop changing the subject .How about answering my question about your bold statement ......
Hanover to the best of my knowledge wasn’t listed onthe NZX.
So be brave and admit , most NZX companies Don’t go bust .
Most of my Kiwisaver fund us in offshore equities ,so not propping up the NZX.

How is talking about investor sentiment about the NZX changing the subject? It's a clear fact in NZ that residential properties are the preferred investment and for most of them, they view listings on the NZX as either a scam or far too risky. So when I say "a bust" it's the general response by what 'people in NZ' think. Second, if the latter is not true, then why does the NZ gov't have to ram down Kiwi Saver? Apart from ASX listings, you are aware any share investment abroad attracts FIF at FDR at RWT rates on PAPER gains. But none of those Kiwi Saver funds ever advertise after tax returns on the portfolio.

The public says a horse with black and white stripes is a zebra... then it must be a zebra. You don't need to hear me back that proof when I say heaps of NZX listed companies go bust or to the lessor extent... yield minimal returns.

[stoploss]

How is talking about investor sentiment about the NZX changing the subject? It's a clear fact in NZ that residential properties are the preferred investment and for most of them, they view listings on the NZX as either a scam or far too risky. So when I say "a bust" it's the general response by what 'people in NZ' think. Second, if the latter is not true, then why does the NZ gov't have to ram down Kiwi Saver? Apart from ASX listings, you are aware any share investment abroad attracts FIF at FDR at RWT rates on PAPER gains. But none of those Kiwi Saver funds ever advertise after tax returns on the portfolio.

The public says a horse with black and white stripes is a zebra... then it must be a zebra. You don't need to hear me back that proof when I say heaps of NZX listed companies go bust or to the lessor extent... yield minimal returns.

Whatever , If you won't take it back " long term majority of NZX listings go bust."
We all know SBQ stands for "Shouldn't Be Quoted"

[Ferg]

SBQ: do you have an opinion on the accuracy of the data on finra?

e.g. https://finra-markets.morningstar.com/MarketData/EquityOptions/detail.jsp?query=126:0P0001DKFB

in particular the accuracy (and timeliness) of the institutional holding percentage? It may seem like a non-sequitur but I reckon there is a direct link between institution ownership percentage and the availability of shares for short selling, i.e. in the main it's not the brokers arranging the shorts, its the large institutional holders. But I digress - do you know if finra is up to date and accurate?

[peat]

As in the article, going short on NZ equities is rare. Hell I tried to enter short positions on NAKD which trades on the Nasdaq and TDAmeritrade didn't have any allocated shares to lend.

The issue is not that one can go short but rather, more to do with the broker you choose. Even more concerning, the particular stock you're betting against and what liquidity would it offer in order to close your position (something I doubt the NZX is really capable of offering). Any broker, in order for them to allow their clients to take short positions requires them to find someone (another broker or major client) willing to LEND those shares. As energetic these trades are in the US equities, there are still limitations due to again, which broker you trade with. The big boys that take short positions usually don't mingle with the small retail market (just like in the IPO sense). Meaning your order to short goes unnoticed and unfilled ; while the key players that do - do so off the record.

The article also says regulations say you can't stay in short position for long. Such as when dividend dates are declared meaning you have to close your position before then. These regulations by the NZX make any proposition to profit even more riskier. Yet from the basic eye - long term majority of NZX listings go bust. This is to protect overseas brokers from hammering on the NZX and raping it knowing that so many small listed NZX companies go bust ; so naturally there will be more regulations on the NZ end of things.

With high commissions and slow executions of trades, why do you want to mess playing on the NZX by going short?

some misleading statements here.... for instance

"regulations say you can't stay in short position for long. Such as when dividend dates are declared"

using CFD's (which is how I imagine most retail investors take short positions ) avoids this concern.

Liquidity is just a constraint on position sizing . so this will limit larger players but actually offers a liquidity premium to smaller players.

And you've been pulled up on the main grandiose statement regarding going bust. So I think you should consider being less authoritative about what amounts to only your opinions

[SBQ]

some misleading statements here.... for instance

"regulations say you can't stay in short position for long. Such as when dividend dates are declared"

using CFD's (which is how I imagine most retail investors take short positions ) avoids this concern.

Liquidity is just a constraint on position sizing . so this will limit larger players but actually offers a liquidity premium to smaller players.

And you've been pulled up on the main grandiose statement regarding going bust. So I think you should consider being less authoritative about what amounts to only your opinions

If you read epower's link to the article:

" To avoid complications with imputation credits, short positions have to be closed out by the record date for any share dividend, limiting the length of time that investors can short blue-chip stocks."

Your reference to CFDs is misleading and falls under equity swaps (which has no relation to short positions although a person can take a short position under a contractual relations). The key difference being... Contracts For a Difference relies between 2 parties with clear distinct bets and this can either be on the long side or the short side.

A good example of where CFD have exploded was last month here:

https://wolfstreet.com/2021/03/29/archegos-implosion-is-a-sign-of-massive-stock-market-leverage-that-stays-hidden-until-it-blows-up-and-hits-the-banks/

"A CFD is a contract between the trader, such as Archegos, and the broker such as Credit Suisse, Nomura, Goldman Sachs, etc. It’s a type of equity swap. Leverage can be huge, and trading is opaque and does not involve an exchange, but takes place between the trader and the broker or a market maker or between parties. In the US, CFDs are illegal for retail traders, but not for hedge funds."

I'm not seeing how small players will get a premium on low liquidity. What is more relevant I see with penny stocks is they go big on the debut and over the years.... they fizzle out in volume leaving the small guy stuck with shares that become il-liquid. Their limit order to sell could go sitting for days or their broker advises that you need to lower the price dramatically so the ask price is attractive enough.

I reaffirm my stance on investing in NZ shares. The historical contents shows companies on the NZX panders to the insiders and screws the retailer share holders by sprinkling them a bit of income streams such as dividends. They don't explain the full impact of share dilution (which I think happens way too often for the various listed companies on the NZX). What option do these listed companies have anyways? If the profits are flat, then expect the share price to be flat (or negative if they are forced on some dividend payout scheme - hint: I'm looking at The Warehouse Group).

I tend to view being a shareholder of a company means you're a "partner" in the business of the company. That means the insiders are on level playing field with the shareholders. This is not what I see for companies listed on the NZX. Have a look at this My Food Bag offering and sit back, wait and see all those insiders getting ready to unload; and therefore, such behaviours is nothing more than a 'bust' in my books.

[SBQ]

SBQ: do you have an opinion on the accuracy of the data on finra?

e.g. https://finra-markets.morningstar.com/MarketData/EquityOptions/detail.jsp?query=126:0P0001DKFB

in particular the accuracy (and timeliness) of the institutional holding percentage? It may seem like a non-sequitur but I reckon there is a direct link between institution ownership percentage and the availability of shares for short selling, i.e. in the main it's not the brokers arranging the shorts, its the large institutional holders. But I digress - do you know if finra is up to date and accurate?

Over in the US, SEC requires all insider trades to be disclosed within 2 days. When that information becomes public domain, then all finance websites can report it. You can subscribe to some websites that may give you a closer edge on the timeliness of information on such trades, but I doubt that would benefit the small investor. They're more for the large hedge funds that scalp all the time.

What makes a company a good candidate to go short on? A lot of that depends on the insiders position - if the CEOs, directors etc. own very few shares in the company then that says a lot as they may have a short time frame of wanting to stay working in the company. Or it means they don't have much long term faith? As in my previous post, when the directors of the company are aligned with the shareholder's view, then you have a company worthy to invest in. What I don't understand is here in NZ there are no capital gains tax on share ownership so there's all the incentive for the CEOs and directors of NZ company to own as much of it's shares of the company they work in, instead of relying on salary pay for so many $ millions.

The brokers in NZ really have no interest in serving retail customers with the ability to go short on any stock. They're not setup that way so rather than explain the systematic problems of the NZX and the push by insiders on corporate side, they rather tell the public that such an activity is viewed negatively. As i've said before, low liquidity means virtually slim chance the broker will have allocated shares so you can borrow. A lack of derivative trades (options and futures) available for the NZ retail investor too adds to the problem. Hell, the NZ FMA claims they're dangerous and should not be undertaken. But what they don't tell you that these forms of trades aid in the liquidity of the share. You need people to make wild bets in derivatives in order to create the liquidity (interest in the company). But to rely on an industry in NZ that people should only go long on the stocks? It's a lack of understanding how the system works, a lack of educating in tax inefficiencies. I mean when you step into an office of a financial advisor in NZ, he/she is not going to have a vast knowledge of taxation around the world for the many different stocks you can buy in. This is the job for the managed funds to figure out and i'm very certain they too don't know any better. A large part of Kiwi Saver I see is they collect all these premiums, and buy an index ETF in America like the S&P500 - but let's charge x 10 times more than what the ETF in America charges in mgt fees. Or let's not try to do complex math and just over-diversify everything, just buy the NZ50 index and leave it at that. Is this how you call "professional management" ? Comon' FMA, you can be sure the CFP in N. America know you're only just fooling the public in NZ.

[Ferg]

@SBQ: I understand what you are driving at regarding NZX; there is no debate from me. It also irks me the likes of Smartshares charge decent fees for investing 100% of their funds into a Vanguard fund - that is daylight robbery. I understand short shares are not usually available to the little guy and that others front run trades via faster data etc., but I want to explore a couple of points to understand how we can identify potential short squeeze opportunities when shorters go too far. It is unlikely I would ever get access to short shares and I'm not about to start selling naked put options, so I'm focusing on short squeezes, hence my questions.

You mention insider trades must be reported in 2 days. What about institutions? Do they have to report by the end of the calendar month or some other timeline?

That previous link I provided regarding iBorrow - I wouldn't be too quick to dismiss that. The numbers agree to what is also reported here:
https://fintel.io/ss/us/nakd

From that link : "NAKD / Naked Brand Group Ltd short borrow fee rates are shown in the following table. This table shows the interest rate that must be paid by a short seller of US:NAKD to the lender of that security. This fee is shown as an annual percentage rate (APR). Lenders are funds or individuals that own the security that have indicated to the broker that they are willing to lend it out. Dividends paid to a shorted security go to the owner/lender of the security, not to the borrower."

Also, that link says their data is updated every 30 minutes. I believe you that the brokers are facilitating the trades, but they must be getting their data through a central body, not just their own clients otherwise the 2 links I provided would not exist. Unless there are other somewhat less formal or unreported shorts that happen purely within one brokerage firm? I think that would be too hard to coordinate and there is no apparent restriction of keeping both trades inside the one brokerage, hence the need for centralisation of data validating those links...? But I am digressing from the real issue. {Edit: I'm wondering were you turned down by TD due to being a retail client? And the lack of available shares was merely talk to make you go away?}

So whilst brokers facilitate the short sale trade, I think it is the institutions making their shares available (what individual would sensibly lend out their shares?). Hence the reason I'm asking about the timeliness of finra for institutions. Where other institutions end up on the other side of the short sale trade, this is how we see institutions owing >100% of shares. And where institutions own >200% of the float that is where they get themselves into a pickle by shorting more shares than are available to repurchase. There are a couple of entities getting dangerously close to 200%, where the reported shorts appear suspiciously low - hence this post.

[Snoopy]

Add the nonsense that NZ shareholders expect dividend payments (despite keeping the profits within the company would generate higher share prices which are tax free capital gain vs dividend payments triggering a tax liability) is beyond me. No wonder investments like the TWG have no capital gains - perhaps a loss when inflation adjusted."


SBQ, saying that a company reinvesting their dividend would generate higher returns rather than just paying out those earnings as dividends shows you haven't recognised the issues of operating in a small island market, such as New Zealand. By the time a company lists, there is generally not more than a four or five year time-frame before a successful company can 'conquer' the whole of New Zealand. From that point growth becomes harder as many who have crossed the ditch to try and repeat their successful kiwi formula in Australia have found to their cost. Retaining earnings for reinvestment only works if there is a clear path to reinvest those funds for future growth. For many kiwi companies there is no such easy path. So it makes perfect sense to return excess earnings to shareholders in the form of a dividend.

New Zealand is a very different business environment to the USA or Canada where by simply going to a different province in your own country, the market for your goods can grow by 100% without working through tax, employment and other 'foreign' legal issues.

If an NZ company pays out all of their earnings as dividends this is the company saying that you as a shareholder can probably earn a better return on these funds than we the company can. And in a lot of cases they are probably right.

You are also wrong about the tax situation of NZ dividends paid to NZ shareholders. Tax in NZ is paid by companies on their profits. There is no extra tax generated by paying a fully imputed dividend to shareholders, because a fully imputed dividend means that the company has already paid tax on those profits and you as a shareholder don't have to pay any more (bar small adjustments between your personal tax rate and the company tax rate). This is quite different to the situation in the USA where companies pay tax on their profits, and when a dividend is paid those profits are taxed separately again in the hands of shareholders.

SNOOPY

[peat]

Your reference to CFDs is misleading and falls under equity swaps (which has no relation to short positions although a person can take a short position under a contractual relations). The key difference being... Contracts For a Difference relies between 2 parties with clear distinct bets and this can either be on the long side or the short side.


what sophistry is this ?
are you seriously excluding a CFD from the universe of short positions because its an equity swap or some such rubbish???

I dont know how far you want to go to prove your point but I am currently short AIR and whatever you want to call it I will benefit if the price falls. If thats not a short position then blow me down I'm a fairy princess.

[SBQ]

@ SNOOPY:

Have a look at Warren Buffet's recent shareholder meeting 2 days ago:

https://youtu.be/gx-OzwHpM9k?t=11336

Play it from that time mark where he explains why paying dividends is not a good way to return shareholder value (for the RIGHT company). He explains it in the case where a shareholder wants to get out (in the eg. the 4th partner in the DQ franchise example):

"What could be more logical if a very small minority of your shareholders want to get out, and most of them want to stay in... you don't give the money to everybody (ie paying dividends)... You give it to the person that wants it."

He's also mentioned in the past that he would rather do share buy backs than to pay dividends which essentially increases the value of the stock and thus shareholder value. Then let the shareholders benefit from the capital gain (for which in NZ would be 100% tax free unless under FIF / FDR). But that is not what we are seeing in NZ. I am not wrong in saying there's a tax disadvantage in collecting dividends ; we've been over this before (Snoopy) in other threads and on most part, most NZX listed companies do not give the FULL 100% dividend imputation credit.

What i'm hitting at is where is this requirement that NZ shareholders want dividends? I've seen this advertised by NZ brokers such as Macquires in their fancy prospectus brochures. I've seen examples like The Warehouse Group (since living in NZ for the past 25 years), that they subscribed to a dividend paying policy but during their expansion in the 90s and early 2000s, they went on a loan borrowing scheme and flooded the market with new share issues after another (share dilution) so they could open up red sheds all over NZ. It seems the largest retailer at the time does not know how to retain share holder value. But when the NZ investment environment, your professional advisors, the NZ gov'ts, everyone in industry subscribes that dividends should be paid - then that's a good enough reason for me to keep my $ out of the NZX.

[Baa_Baa]

@ SNOOPY:

Have a look at Warren Buffet's recent shareholder meeting 2 days ago:

https://youtu.be/gx-OzwHpM9k?t=11336

Play it from that time mark where he explains why paying dividends is not a good way to return shareholder value (for the RIGHT company). He explains it in the case where a shareholder wants to get out (in the eg. the 4th partner in the DQ franchise example):

"What could be more logical if a very small minority of your shareholders want to get out, and most of them want to stay in... you don't give the money to everybody (ie paying dividends)... You give it to the person that wants it."

He's also mentioned in the past that he would rather do share buy backs than to pay dividends which essentially increases the value of the stock and thus shareholder value. Then let the shareholders benefit from the capital gain (for which in NZ would be 100% tax free unless under FIF / FDR). But that is not what we are seeing in NZ. I am not wrong in saying there's a tax disadvantage in collecting dividends ; we've been over this before (Snoopy) in other threads and on most part, most NZX listed companies do not give the FULL 100% dividend imputation credit.

What i'm hitting at is where is this requirement that NZ shareholders want dividends? I've seen this advertised by NZ brokers such as Macquires in their fancy prospectus brochures. I've seen examples like The Warehouse Group (since living in NZ for the past 25 years), that they subscribed to a dividend paying policy but during their expansion in the 90s and early 2000s, they went on a loan borrowing scheme and flooded the market with new share issues after another (share dilution) so they could open up red sheds all over NZ. It seems the largest retailer at the time does not know how to retain share holder value. But when the NZ investment environment, your professional advisors, the NZ gov'ts, everyone in industry subscribes that dividends should be paid - then that's a good enough reason for me to keep my $ out of the NZX.

It's a pity you don't like anything about NZ markets or tax laws, or a lot of things the tie up peoples wealth. Anyway, it's got nothing to do with the subject - short selling in NZ.

Get back on topic.

[SBQ]

what sophistry is this ?
are you seriously excluding a CFD from the universe of short positions because its an equity swap or some such rubbish???

I dont know how far you want to go to prove your point but I am currently short AIR and whatever you want to call it I will benefit if the price falls. If thats not a short position then blow me down I'm a fairy princess.

No one is saying NZ investors can't go on the short side. The thread asks why it's not commonly done in NZ or why it's looked down upon and how come NZ brokers are not providing this service to their customers.. etc. It is clear, the FMA advises against it. My argument is short position serve an important service to keep markets efficient and more 'fair'. Such as if the directors on a listed NZX company screw around with shareholders, then it's also fair for the retail side to show their might by calling their bluff by going on the short side. This is not what we have in NZ equities and hence why I said in the other thread that most of these NZ companies go bust when they treat shareholders as tools.

Your reference to CFD is entirely a different story and generally for those high level, sophisticated investors managing large hedge funds (such as the blow up we seen with the Archegos leverage 2 months ago).

Keep in mind, at the end of the day ; it's only my 2 cents.

[Snow Leopard]

....we've been over this before (Snoopy) in other threads and on most part, most NZX listed companies do not give the FULL 100% dividend imputation credit....


Did you know, and obviously some people do not, that of the NZX listed entities that paid dividends in the last financial year most (as in 64) provided full, or near full as makes no difference to anyone but a pedant, imputation credits.

There were 40 whose imputation paying record failed this high standard.

The remainder achieved the ultimate in 'tax efficiency' and paid no dividends.

Personally I buy and hold shares based on the total after tax return I expect to receive, and any narrow-minded-come-over who wants to tell me I do not know what I am doing can go for a long walk down a short pier.


...Anyone doing or done short selling on the NZX on Sharetrader?

Love to hear your story on it

That was the original question and unfortunately my answer is No but...

...I did buy 7 big bars of Whittaker's Dark Ghana today.

Disc: I have leant out ASX shares for short selling and invested in a few short funds at times

[peat]

Your reference to CFD is entirely a different story and generally for those high level, sophisticated investors managing large hedge funds (such as the blow up we seen with the Archegos leverage 2 months ago).

Keep in mind, at the end of the day ; it's only my 2 cents.

Just as well you qualified that its only your view coz it seems quite different to my view .

CMC market their CFD's to retail and I am retail , Sure I am experienced and knowledgeable but just minor retail in the big scheme so I just dunno how you form these views

[thebusinessman]

A couple of months ago I thought it might be a good idea to buy a couple of put options on A2 Milk, not so much looking to short sell, just looking for the right to sell. However, it became clear there wasn't a way to do this on the NZX...

Using CMC and their CFDs didn't seem to give me an option I was looking for to "activate" the sell at a specific price level, rather it seems to be an ongoing system where you enter your CFD at the current market price and let it ride from there.

Can anyone tell me if I have fundamentally missed an option available in the market (no pun intended, but I left it there!). Are there more straight forward ways of buying "traditional" puts and calls on NZX listed stocks?

[peat]

not that I am aware of 'thebusinessman'
our market is thin enough at the security level that derivative level just doesnt get a chance

but there are A2M derivatives shown on the ASX

https://www2.asx.com.au/markets/trade-our-derivatives-market/derivatives-market-prices/single-stock-derivatives