New Zealand is riding high this year as one of the world's best performing stock markets in spite of an earthquake, a weak economy and a foreign debt burden on a par with Greece.
The share market, worth a total of around only $48 billion (Dh176.3 billion), is up almost five per cent so far this year, with most of those gains coming after a February 22 earthquake wrecked Christchurch, the country's second-largest city, killing 181 people.
The rise is modest in absolute terms, but stellar when compared with many other markets in an uncertain world. The rally has been supported by investors in Australia turning away from the Sydney market, which is down two per cent this year.
In recent weeks, New Zealand's benchmark top 50 index has at times been the world's top performer, outpacing the US market in its continued rebound from the crash of 2009 and overtaking the up-and-coming emerging market of Indonesia.
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"The earthquake was a dreadful disaster but what it's done has been to keep monetary policy easy, at the same time as a massive amount of money is flowing in for the rebuild from the global reinsurance companies," said Andrew Bascand, managing director at Wellington-based Harbour Asset Management.
A strong run-up in the New Zealand dollar since a 2011 low in March has added to gains for investors who entered the market in time. The currency is now trading close to a 30-year high.
In US dollar terms, the New Zealand stock market is also one of the best performers in the world.
That's not to say there are no risks. New Zealand is highly exposed to the global economy. Like Greece, external debt is about 77 per cent of GDP although in New Zealand the liability lies with the private sector rather than the public one.
That is difficult to change since low domestic savings push borrowers offshore, leaving the banks in particular exposed to the vagaries of the global economy.
In addition, the strength of the New Zealand dollar could be off putting for foreign investors considering fresh investment.
That leaves analysts cautious about the outlook.
"The New Zealand equity market will be influenced by global equity markets and they look to be improving at the moment, but there are many risks out there," Bascand said.
Cost of reconstruction
A post-quake rebuilding plan due to start over the next six months anticipates spending of $12.5 billion — equal to around seven per cent of gross domestic product.
The prospect of reconstruction has helped push pipe-maker and steel supplier Steel and Tube up 25 per cent this year.
Shares in New Zealand's biggest-listed company, building products firm Fletcher Building, are up more than nine per cent.
On the flip side, New Zealand insurer and fund manager Tower is down 28 per cent this year. Its first half profits fell 54 per cent as earthquake-related costs overwhelmed gains in its investment business.
The central bank has also kept credit cheap, making an emergency rate cut shortly after the quake. The rate remains at a record-equalling low of 2.5 per cent.