The New Zealand dollar has gained about 20% against the U.S. dollar in 2007, but there’s no exchange-traded currency fund. Investors have only been able to select the Australian CurrencyShares Trust (FXA), which has appreciated a very respectable 10%.
The New Zealand stock market is up 30% in 10 months time, but there’s no exchange-traded fund to capture the move. Investors have primarily been relegated to the profitable, yet altogether different country fund, the MSCI Australia Index (EWA). From my calculations, EWA is up roughly 27% over the same time frame.
It’s not that New Zealanders, often called "Kiwis," aren’t familiar with playing second fiddle. Nor is it a stretch to say that both countries have shared similar fortunes. Nevertheless, one might expect an ETF provider to offer direct access to one of the preeminent, developed opportunities on the international scene. (That’s not to say that one isn’t in the pipeline!)
And while New Zealand shares a great many things with Australia, some of the differences are worthy of note; specifically, homes currently spend less than one month on the market. Australia has it good, but not quite that good. (And as we know for the U.S. itself, homes spend as much as 7 months waiting to sell… if they sell… and at lower median prices.)
New Zealand, like most international stock markets, took a 20% pounding in the recent month’s activities. Although this parallels the global credit crunch, it’s more about the yen carry trade’s effect. (New Zealand has the highest, developed country interest rate… and more hikes are not out of the question. But when worldwide investors start repatriating their dollars and/or investing in the yen, the fortunes of New Zealand can turn to misfortune quickly.)
Still, this is an economy that is firing on all cylinders… from real estate to worldwide demand for commodities to strong domestic demand and labor shortages. It’s been estimated that there are less people than dairy cows… no wonder there’s a shortage of people to work!
If the powers that be would be kind enough to offer a New Zealand ETF that tracks the 50 largest stocks there, I think investors would be intrigued. Similarly, an New Zealand CurrencyShare from the Rydex family is a fair request.
Are there alternatives in the meantime? One that has been discussed by Ken Fisher and others is an individual stock, Telecom Corp. of New Zealand Ltd. (NZT). Although it recently took the same 20% beating as the rest of the New Zealand stock market during the global credit crunch period, this is a reasonably pried utility that yields 8%+. In a strong economy with traditional phone needs as well cell, Internet and so forth, NZT is worthy of note.