NZX vs ASX which is better?

[rmbbrave]

Kiwi sharemarket faces uphill struggle
VIEWPOINT - TERRY HALL
We can beat the Aussies. In the four years from March 2003 to the highs recorded last month, the New Zealand sharemarket performed marginally better than theirs.

The question is whether we can continue to do as well, once the current jitters are over. Logic – including the prospect of further interest rate rises and the latest lacklustre round of profit results – suggests we face an uphill struggle.

However, the Kiwi market has confounded observers in the past, and could do so again.

The March 2003 low for the NZX50 was 1869, and it hit a high of 4216 last month, a rise of 125 per cent. During the same period, the ASX200 rose 123 per cent, from 2693 to 6052. In subsequent trading the gap has narrowed to about 1 per cent.

http://www.stuff.co.nz/3990177a1865.html

[rmbbrave]

Both about the same.

[Crypto Crude]

ASX is much better choice when you take into account exchange rates...
And that medium term exchange rates are unsustainable at these current levels....

Also lets look at an example...
$1000 on NZX... 125% return = $2250 you get back

$1000nz *.9= 900aus
900*1.23= 1107+900= 2007
2007/.8= $2508

on falling exchange rate you are better off... which is pretty much a certainty over the next couple of years...
http://www.rbnz.govt.nz/keygraphs/fig8.html
Look at this graph and see that a new cycle is imminent...
click on the smaller graph and look at the green line....
its a cycles game....
[8D]
.^sc

[ratkin]

ASX also better for diversification purposes. If NZ suffers something bad like foot and mouth or terrible earthquake then at least all your eggs wont be in the one basket

[salsanova]

i've just started trading the asx and have found the biggest difference is the liquidity in the market place especially if you intend to be a short to mid term trader here you have the oppertunity to turn over your stocks for 10% gain in 1 week to 1 month periods fairly easily and if you are luck even 1 day this is over a larger variety of indexes as well as stocks etc

[etrader]

quote:Originally posted by salsanova

i've just started trading the asx and have found the biggest difference is the liquidity in the market place especially if you intend to be a short to mid term trader here you have the oppertunity to turn over your stocks for 10% gain in 1 week to 1 month periods fairly easily and if you are luck even 1 day this is over a larger variety of indexes as well as stocks etc

agree i am mainly buying in oz and with the multi millions that go through it's easy to get in and out and clip a profit on the way.

[SEC]

quote:Originally posted by rmbbrave


We can beat the Aussies. In the four years from March 2003 to the highs recorded last month, the New Zealand sharemarket performed marginally better than theirs.

I'm sure Terry Hall realises he's comparing apples with pears when he made these outlandish statements in his ill-researched article but a few uninformed investors were probably sucked in.

Let's get the facts right. You cannot compare a capital index with a gross index like Hall has.

So what has been the REAL comparison? Firstly, let's try comparing capital indices. The NZX does have a capital index, the NZX All Capital Index. But the NZX doesn't promote it, and judging by its performance since its inception (30 April 2003), one can see why. In the same period the NZX50 has gone up 104% (30/04/03 - 31/03/07) - 20% annualised, the Capital Index has only gone up 57% or 12.1% annualised. Nearly half the gains of the NZX50 are due to gross dividends, adding on average an extra 8% every year to the index.

Over the same period the ASX200 capital index has gained 99%, or 19.2% annualised. Thus on a capital basis the ASX has significantly outperformed the NZX.

Oh dear, I hear howls of derision from the Weldon groupies 'what about all those dividends NZX companies pay - far more than what the Aussies pay'. Well, let's take a look at the performance of the ASX200 Accumulation index (capital + NET dividends). It's gone up 136% over the same period, or 24.5% annualised. But the ASX200 AI and the NZX50 still cannot be compared properly get since we have to convert the NET dividends to GROSS dividends. The affect of net dividends has added an extra 5.3% annually @ 30% tax rate. The gross dividend works out to be 7.6%. Adding this to the 19.2% capital gain the ASX 200 Accumulation Gross Index has returned 26.8% pa or 153% since April 2003. The ASX is still far better than the NZX50 on an FAIR COMPARISON.

How on earth the Herald allowed that tripe to be published I'll never know – business journalism quality plunging to new depths for a feelgood story.

SEC

[hods]

Hi All .... After a bit of advice. I am currently trading in the ASX but using a NZ bank account and broker.
I am thinking that it would be better to open a Aussie bank account and use a Aussie broker so I don't keep getting pinged on exchange between buying and selling.
Also if I do open the account in Aussie, do I get pinged for the Aussie Capital Gains Tax or am I taxed on the gains made by the NZ IRD?
Cheers
Hods

[OldRider]

Hi Hods:

I am not a tax expert, and just quote from my experience.

Your country of residence determines where you will pay tax. There is no liability for Aust capital gains tax over there just because you have a bank account there into which dividends are paid, even though they might never be brought back to NZ.

You have labelled yourself a trader,(which may or may not be a correct label), if so the capital gains will be taxable in NZ, dividends will be taxed here similarly and you are unable to use the franking credits, any withholding tax paid in Aust on dividends may be claimed on your NZ return.

I have kept an Australian bank for many years and find it convenient and inexpensive, though still find using my bokers Aust dollars account necessary, as a first step, just an Aust dollar account with your broker may be all you require.

[hods]

Thanks OldRider ... you have confirmed what I thought.
Yes I have classed myself as a trader as Macdunk in one of his posts said "It is best to be honest and up front" with regard to the IRD and paying tax.
I have Aussie shares in a Trust account which are more long term investments, but am wanting to trade share personally on a more short term basis to earn a bit of "pocket money" so to speak. The problem with using someone like Direct Broking for trading Aussie shares is that they don't have any conditional order functions (only for the NZX).

So I thought using an Aussie online broker such as ANZ E-Trade would provide better functionality, only down side is I need to open a Aussie bank account and since I am going to visit my daughter in Melbourne this week, it would be a good time to open an account up as you need to front personally!!!.

Anyway enough of my ramblings ... thanks for the reply, it is much appreciated
Hods