Record Month For Dairy Derivatives & Debt Trading

· SGX-NZX Global Dairy Derivatives post a record volume month

· Debt market continues to thrive, and bonds remain strong.

· Value and volumes traded remain soft, particularly across wholesale markets due to ongoing global uncertainty and volatility.

· ANZ New Zealand capital raise in August to meet new regulatory capital requirements.

NZX has released its key market metrics for July 2022, with SGX-NZX Global Dairy Derivatives and debt market activity both reaching record monthly highs.

Soft trading in equities in wholesale and retail markets remains due to ongoing market volatility and uncertainty. Globally, equity indices, including the S&P/NZX 50, recovered from lows but continue to be impacted by macro-economic and geopolitical events caused by inflation, rising interest rates and the war in the Ukraine.

July saw strong trading of SGX-NZX Global Dairy Derivatives, with a new monthly volume record set. There were 47,508 lots traded across all derivatives products in July, up 3.5% from the prior record, with the Futures-only record being broken at 45,172 lots in the month, up 8.6%. Year to date total dairy derivative volumes traded have increased 44.2% versus the same period in 2021.

“It is exciting to see dairy derivatives liquidity growing as we leverage our strategic partnership with SGX. Both distribution via clearing members and on-screen liquidity are going from strength to strength as we work alongside SGX to develop this global product,” says NZX General Manager, Strategic Delivery Nick Morris.

The market saw 72% of volume executed on-screen during July, the highest percentage since the launch of the partnership last year. Developing on-screen liquidity has been a key focus for both exchanges since the launch of the partnership to attract speculative involvement to enable growth.

In July total value traded across the NZX was $2.46 billion, a decrease of 20% from June. This was across both wholesale and retail markets, with wholesale down 20.7%, and retail down 16.4%. July did see TradeWindow’s inaugural equity issuance following their direct listing in last year’s fourth quarter, raising $10 million in equity capital.

“This demonstrates the importance of NZX as a vehicle for companies to raise capital in the current environment. TradeWindow’s direct listing is now providing strong opportunities for its future growth plans,” says NZX General Manager Capital Markets Origination Sarah Minhinnick.

Notwithstanding challenges in equity markets, the exchange continues to offer a broad offering base as investors and issuers adapt to prevailing market conditions.

By example, July saw another record month in value and volume trading in debt, surpassing last month’s record. Value traded on the NZDX in July was $237.8 million, up 4.1% (on June’s record setting month). Volume traded was $246 million. Retail now represents 36% of all debt value traded, and 56.5% of all debt trades.

Minhinnick says while trading levels in equity markets remained soft; the S&P/NZX 50 was up almost 7% on June – its best month so far this year. And continuing strength was recorded in debt markets – including ANZ’s $550 million offering of AT1 debt.

“After another record month, debt market capitalisation now represents 22.7% of total NZX market capitalisation, the highest contribution since 2010,” Minhinnick says.

ANZ New Zealand’s $3.5 billion capital raise in connection with its Suncorp acquisition will be fully completed in August.

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