Exchange Mania

I am probably contributing to the mania. Today I had an article published on RealMoney about a couple of foreign exchanges (not the LSE which I have written about here before).

There are many exchanges that are public around the world and really the US is late to the party. One exchange I did not pursue for the article that I would say to avoid is the New Zealand Exchange (NZX.NZ). For now, it is not easily accessible because there is no five-letter OTC symbol to facilitate trading here. It would be easy to set one up, so I was told, but that is not the point.

The focus here is a little bit of process. I think I have been reasonably in touch with the public exchanges, I was wrote positively about the LSE for my since discontinued newsletter about a month ago.

There really is a mania for these stocks. Owning one of them in a diversified portfolio is not a bad idea as I think they can be proxies for all sorts of things related to the home country.

The NZX is kind of a different animal. No secret that short term I am out of New Zealand but I am long term bullish and expect to be back in during the next few months. However, after having visited there I can say that for the most part, kiwis don't care about stocks. There is no stock market television because of lack of demand. I don't think this hampers growth in prices, in general, but if there is not much excitement about investing, shares of the exchange become a poor proxy for the economy.

I may not have thought about this had I not visited. A lot of the other exchanges out there have catalysts that could be important ranging from economic emergence to consolidation but NZX seems to be missing both.

This type of analysis, right or wrong, is a kind of top down assessment. In the big picture, I don't see the NZX being a share price leader or good proxy for the reasons I have stated. There are headwinds that make it relatively unattractive.