How to trade on the NZX? How to buy Australian shares in New Zealand?

Summary

  • Anyone who is a NZ resident and has NZ bank account can trade on the NZX.
  • One can buy shares either directly or through a broker.
  • New Zealanders interested in buying shares in Australian companies can do so with various options available.

The New Zealand Stock Exchange (NZX) is a marketplace for investors to buy or sell the listed equities. It provides several options to the investors like the access to savings, investment, insurance, research, and wealth management products. The NZX is also connecting its listed companies to international markets so that they can grow. The NZX has Memorandums of Understanding with some of the best stock exchanges around the world like NASDAQ, Singapore (SGX), Hong Kong (HKEX), Shanghai Stock Exchange (SSE) and The South Pacific Stock Exchange (SPSE)

Who can trade on the NZX?

Any New Zealander can buy or sell shares on the NZX. It is an open platform that provides an opportunity to anyone to trade on it. Investors, big or small, with any amount of money can start investing on the stock exchange.

An investor can trade at his own pace through virtual, risk-free environment. Anyone can log in and trade on the NZX virtual trading 24/7. Everything in virtual trading is the same as the actual trading of NZX-listed shares and ETFs.

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How can I buy shares?

Investments in the New Zealand Stock Exchange can be made either directly or through a broker. There are several brokers registered with the NZX and listed on the Website.  

For beginners, Sharesies is available for anyone who is above 16 years of age, is an NZ resident, and has a NZ bank account. A kid’s account can also be set but it has to be linked to the adult’s bank account.

However, if you want to trade yourself, it can be a little confusing. So, they should first open an online account, which is a simple thing to do. Then they have to decide what kind of investor they want to be, choose which shares they want to buy and decide the amount they want to invest.

To buy shares without a broker

There is a direct stock purchase plan (DSPP) program that enables an investor to purchase a company’s stock directly without the intervention of a broker. The DSPP is generally offered to the investors, either directly through a retail offer or some agents.

The DSPPs have become less used as they come with certain restrictions about when an individual can purchase the shares on the NZX. Also, not all companies offer DSPPS. These plans have lost appeal in the last two decades as investing through online brokers has become less expensive and more convenient. However, DSPPs still offer an advantage for the long-term investor who doesn't have much money to start.

Buying Australian Shares in NZ

As a New Zealander, there are many reasons why you might want to invest in Australian Companies. Firstly, there are a number of NZ companies like Xero that are listed on the ASX but not on the NZX. Secondly, there are many companies that the investors are familiar with such as AfterPay, Woolworth or NAB, which are present of the NZX. Or maybe, an investor in NZ just wants to diversify his portfolio away from the small NZ market.

Whatever the reasons, one can invest in the Australian market --

Funds: Investing via funds is an easy way to get an exposure to Australian shares. Through these funds, one gets exposed to a number of different Australian companies and one doesn’t have to go through too much research to find companies.

There are many options in funds as well:

Smartshares: They offer four different index funds that invest in the Australian sharemarket:

S&P/ASX200: Invests in the 200 largest companies on the ASX.

Australian Top 20: As the name suggests, invests in 20 largest companies.

Australian mid cap: Invests in 51st to 100 largest companies.

Australian dividend: Invests in the 50 highest dividend-paying companies within  ASX 300.

In addition, they offer sector specific funds:

Australian Financials: Invests in financial sector companies.

Australian Resources: Invests in resources sector companies of ASX200.

Australian property: Invests in real estate investment trusts (REITS).

These funds can be purchased from InvestNow, Sharesies, directly from Smartshares or an NZX broker.

Individual shares: For those investors who want to buy individual shares, they can do through Sharesies. Sharesies launched its Australian offering in April 2021, giving New Zealanders access to Australian shares on the Australian market. Further, ASB Securities and Jarden also offer services for purchase of shares of individual companies. One can open a brokerage account with one of the four big banks if one has an existing account there.

These are: Commonwealth Bank-CommSec, Nab-nabtrade, Westpac-Westpac Share Trading, ANZ--ANZ Share Investing.

However, there are some limitations to investing in individual shares in Australia, but they are no different than investing in shares of any other countries. Beginning with foreign exchange to currency fluctuations to ownership, there are issues that have to be tackled or the investor must be prepared for before going in for individual shares. Especially, when buying shares in Australia, the shares will be held in the name of a custodian.

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