Valuing The New Zealand Stock Market (NZSX)

In the spirit of The Economist’s “Big Mac Index“. Here at Valuecruncher we decided to undertake a small exercise to assess the overall current v

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aluation of the New Zealand stock exchange (NZSX) – the market as a whole. Our objective was to assess whether the overall market might be over- or undervalued.

To do this we took a simplified approach. At Valuecruncher we have completed valuations for 36 of the NZX50 companies. Four of these companies are not NZ-based so we eliminated them. That leaves us with 32 companies. These 32 companies have a market capitalisation of NZ$30.2 billion – this represents just under 70% of the NZSX total market capitalisation of NZ$43.8 billion. We took these 32 companies and compared our valuations to the current share price – determining a percentage under- or overvalued. We then weighted these percentages by the market capitalisation of the 32 companies. By summing these weighted averages we came up with an estimate of the valuation of the New Zealand market.

Based on our sample of 32 companies – representing just under 70% of the total NZSX market capitalisation. Valuecruncher estimates that the New Zealand stock exchange is undervalued by just under 5%. Valuecruncher is saying that overall the market looks slightly cheap. Our numbers are included in the table below.

Hat tip to Steve Gawn at ANZ National for the idea for this analysis.

NZX Compariosn

More on this topic (What's this?)
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Read more on Investing in New Zealand, Cross-harbr (HLDGS) at Wikinvest

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This entry was posted on Thursday, March 19th, 2009 at 3:51 am and is filed under NZX. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Valuing The New Zealand Stock Market (NZSX)”

  1. EMH Doubter Says:
    March 19th, 2009 at 8:09 pm

    So in summary:
    Based on this analysis ‘on average’ the market appears to be “efficient”.
    However on at an individual stock level not so (and in some cases significantly not so).
    Therefore stock selection is alive and well as a means of generating excess returns.

  2. The Crunch Says:
    March 21st, 2009 at 9:28 am

    I am sure Warren Buffett would agree with that analysis.

  3. Reyes Says:
    July 5th, 2009 at 11:22 am

    Just located your blog. This appears like an extremely educational site and I marvel at the effort you put into it. I’m going to plan to go to your website over and over.

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