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New Zealand ETF Sort of OK Compared to Other Developed Markets


December, often a good month for stocks, particularly in the U.S., was such a lousy month that just one of the 48 global equity markets tracked by the S&P Global Broad Market Index (BMI) traded higher.

That honor goes to New Zealand and while the iShares MSCI New Zealand Capped ETF (ENZL) finished 2014 well off its highs for the year, the ETF was one of the year’s better ex-U.S. developed markets funds.

Last month, stocks in New Zealand rose 2.3% and over the past three months, stocks there are up just over 6%, according to S&P Dow Jones data, indicating that the weaker New Zealand is having some positive impact on stocks.

Although the Reserve Bank of New Zealand was the first developed market central bank to hike rates, doing so twice earlier this year, the kiwi has been in a steady decline against the U.S. dollar. Over the past two years, the kiwi has lost 30% against the greenback. [New Zealand ETF Higher After Rate Hike]

RBNZ was expected to raise rates again at its December meeting, but surprised global markets by opting to keep its benchmark cash rate at 3.5% for a third straight meeting. “A Reuters poll taken after the latest statement had a majority view that the RBNZ will pause at least until the third quarter” of 2015, according to Reuters.

When measured against the iShares MSCI Australia ETF (EWA) , ENZL looks even more impressive. The New Zealand ETF managed a 2014 gain of 12.6% while EWA, the largest Australia ETF slid 4.7%. Stocks in Australia lost 2.6% last month while their New Zealand counterparts were rising.

In November, Australian stocks were the second-worst offenders among developed markets tracked by S&P Dow Jones Indices. The only developed market that performed worse was Norway.

New Zealand stocks trade at slight premiums to their Australian, Canadian and U.S. counterparts, but New Zealand is modestly undervalued against the global benchmark, the S&P Global BMI Index. Investors pulled $9.4 million from ENZL last year. The ETF has $132.7 million in assets under management and a trailing 12-month dividend yield of 4.29%.

iShares MSCI New Zealand Capped ETF


ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.