Dual listed companies - NZX and ASX

Is there ever any benefit in investing in the same company on both exchanges?

NO, there no benefit

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Originally Posted by justakiwi

Is there ever any benefit in investing in the same company on both exchanges?

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An NZ shareholder holding a joint NZ/AUS listed share, whether in Australia or New Zealand, will still have the same imputation credits (which they can use) and franking credits (that they can't use) no matter what country's exchange the shares are held on. The only difference is that any sales in Australia will be conducted in Australian dollars, albeit at a market adjusted price that reflects the exchange rate of the day. There are brokers on both sides of the tasman who will arbitrage away any small pricing anomalies. From a small investor perspective there is share price equivalence.

Over the last eight years in particular, the NZ/Oz exchange rate seems to hover around $NZ1 = $A0.9. We are both regarded as 'commodity trading economies' and as such the relative exchange rates tend to move in step. In recent years the interest rates in both countries have come into alignment as well which makes both our economies even more aligned from an international perspective. Broadly speaking both countries have done well navigating Covid-19 too. Australia does have the advantage of being 'larger scale' and has a broader range of commodities it trades. We both share a solid agricultural base, but Australia has a very extensive mining industry adjunct to a far greater extent than we have here. What I am saying, in a long winded way, is that I expect the exchange rate to continue to hover around the $NZ1 =$A0.9 in the medium to long term. And that relativity will be maintained because the Australian economy is, at a very basic level, stronger. If you look at the ten year exchange rate chart though, occasionally opportunities present themselves.

In March 2020 for example, our currencies got close to parity. In that situation I would make the case for buying your NZ domiciled dual listed share on the Australian market. Then as the exchange rate drifted back to a more normalised value, you would end up with more NZD value (because you had effectively used $A to buy your shares when the $A was unusually cheap). But of course this only 'works' if you have a supply of Australian dollars to spend. As I have a steady dividend stream from my ASX investments, I do have this. I wouldn't recommend this as a strategy in itself, as I think it is a fools game to think you can predict exchange rates in the short term. However, if you can afford to wait out these exchange rate movements, and I have made my case as to why the NZD/AUD exchange rate should be stable long term, then there may be a chance to increase your NZD value by buying when the NZD is strong and selling when the NZD is weak on the Oz market while the underlying value of the NZ domiciled asset does not change. My strategy here is to 'wait for the market to come to me' rather than investing with the expectation that such a thing will happen.

A side benefit of this is that you can shunt dual listed shares from the Oz market to the NZ market at no cost and avoid bank exchange rate charges that would otherwise be incurred by selling in Australia and bringing Australian money back to NZ.

This kind of thing I regard as investing 'around the edges'. Share selection is always a much more significant effect than any of this.

SNOOPY

P.S. Another potential advantage is the timing window. You can buy/sell an Australian dual listed share on the NZX before the ASX opens. Likewise you can buy sell an NZ dual listed share on the ASX after the NZ market has closed.

Thanks for this SNOOPY - very helpful :)

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Originally Posted by Snoopy

P.S. Another potential advantage is the timing window. You can buy/sell an Australian dual listed share on the NZX before the ASX opens. Likewise you can buy sell an NZ dual listed share on the ASX after the NZ market has closed.

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Yes sometime the NZ market doesnt full reflect the news announcements because its thin or whatever and you can pick up Aussie shares cheap on the NZ exchange. But this is of course just another form of speculation.

But I also tend to buy Aussie if we ever approach parity and then sell it back at 0.9 ish... but then I've traded currencies for yonks ... so its what I do.

Again, no real benefit to the retail investor.

The ASX examples may be close to the NZX as what Snoopy described. Same imputation credits, most ASX listings exempt from FIF, etc.

I can assure you all that is different if the company was listed elsewhere say on the Nasdaq or NYSE.

The currency gains again are speculative and hindsight is always 20/20.

It wasn’t something I was thinking of doing myself. I was just curious as to whether there was any benefit.

Thanks for your comments :)

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Originally Posted by SBQ

Again, no real benefit to the retail investor.

The ASX examples may be close to the NZX as what Snoopy described. Same imputation credits, most ASX listings exempt from FIF, etc.

I can assure you all that is different if the company was listed elsewhere say on the Nasdaq or NYSE.

The currency gains again are speculative and hindsight is always 20/20.

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Originally Posted by Snoopy

A side benefit of this is that you can shunt dual listed shares from the Oz market to the NZ market at no cost and avoid bank exchange rate charges that would otherwise be incurred by selling in Australia and bringing Australian money back to NZ.

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Is that to say you can buy dual-listed shares on the NZX, and then sell the same shares as their ASX equivalent - and vice-versa? What's the process for doing this, as a retail investor?

I've noticed a big difference in liquidity between NZX and ASX for the mid-cap dual-listed shares. For example, MFB was very lightly traded on the ASX before they delisted there, and spreads were huge. If you got stuck with such a holding, you might prefer to sell it on the other exchange.

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Originally Posted by bulltrap

Is that to say you can buy dual-listed shares on the NZX, and then sell the same shares as their ASX equivalent - and vice-versa? What's the process for doing this, as a retail investor?

I've noticed a big difference in liquidity between NZX and ASX for the mid-cap dual-listed shares. For example, MFB was very lightly traded on the ASX before they delisted there, and spreads were huge. If you got stuck with such a holding, you might prefer to sell it on the other exchange.

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The Australian system is a little different to NZ. Over there you have 'issuer registered shares' and 'broker registered shares'. Brokers only sell shares on their own register in Australia. That is different to New Zealand where any share on the issuer register can be sold by any broker.

I remember I got miffed a few years back (before they delisted in NZ) by the Telstra NZ share register sending me one of those Oz market buyback documents, set up for ASX investors. NZ investors always lose if they fill in these forms, because any money received from capital sales in this way legally has to be declared as 'dividend income' in NZ. Yet there was no advice given that NZ investors should not fill such forms out, and stating they would get more money by simply selling those same shares on market.

IIRC, as a result, I wrote to the Telstra registry in NZ, asking them to transfer my shares to the registry issuer holder in Australia. Cost was a sheet of paper and a postage stamp. I believe the next step would be to ask the issuer register in Australia to transfer their holding to the Australian broker register of my choice. However I haven't done this yet. Perversely, I have had mail from the registrar (Computershare Australia), claiming that they can sell by shares up to a certain dollar limit (AUD75,000) without going via an Aussie broker. I haven't followed that up. Interested to hear from anyone who has!

SNOOPY