{"id":150493,"date":"2025-11-24T02:35:13","date_gmt":"2025-11-24T02:35:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/150493\/"},"modified":"2025-11-24T02:35:13","modified_gmt":"2025-11-24T02:35:13","slug":"why-the-nzx-50-record-high-isnt-what-it-seems-mark-lister","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/150493\/","title":{"rendered":"Why the NZX 50 \u2018record high\u2019 isn\u2019t what it seems \u2013 Mark Lister"},"content":{"rendered":"

\n At first glance, this would all suggest
\n that our market has regained all its lost ground, surpassed the previous market peak and pushed on to bigger and better things.\n <\/p>\n

However, that\u2019s not quite so.<\/p>\n

The NZX 50<\/a>, our key sharemarket index, is different to many of the other benchmark indices across the world in one important way.<\/p>\n

It\u2019s a \u201cgross\u201d index, which means it includes dividend payments as well as taking into account changes in share prices.<\/p>\n

All of the commonly quoted international indices, such as the S&P 500 in the US, the ASX 200 in Australia and the FTSE 100 in the UK, are \u201ccapital\u201d indices.<\/p>\n

This means that they reflect only changes in share prices, while ignoring dividends.<\/p>\n

When we exclude dividends paid and look at share prices alone, the New Zealand market is still 13.9% below the early 2021 peak, some way off an all-time high.<\/p>\n

There\u2019s some logic to the way our index is calculated and it\u2019s not a matter of the NZX trying to fudge the numbers.<\/p>\n

The New Zealand sharemarket has always been a high-dividend-paying market compared with international markets, where dividends are much lower.<\/p>\n

Over the past 30 years, more than 60% of the return from New Zealand shares has come from dividends.<\/p>\n

In contrast, US share investors get a far greater proportion of their return from rising share prices.<\/p>\n

Being a high-income market isn\u2019t a bad thing and it partly reflects the dominance of stable, mature businesses like those in the utilities, infrastructure and real estate sectors.<\/p>\n

Another important reason for this dynamic is our relatively unique tax system and our imputation regime.<\/p>\n

When New Zealand companies pay tax on their profits, they accrue imputation tax credits.<\/p>\n

They can attach these to the dividends they pay to shareholders to ensure investors don\u2019t pay tax a second time.<\/p>\n

That means the dividend payments you\u2019ll get from your New Zealand shares are close to tax-free.<\/p>\n

With the exception of Australia (which calls these franking credits), most other countries make investors pay tax on dividends from shares.<\/p>\n

That\u2019s why you\u2019ll often see US companies doing share buybacks to distribute capital to shareholders, because it\u2019s more tax-efficient for them.<\/p>\n

Returns are returns and we shouldn\u2019t be too concerned whether we receive them via income or capital growth.<\/p>\n

But it does mean we need to be wary of comparisons with overseas indices.<\/p>\n

When I make performance comparisons between different markets, I add dividends to indices such as the S&P 500, to ensure these are \u201capples with apples\u201d.<\/p>\n

In practical terms, many investors will have recovered the losses of recent years, but only because of the income they have collected along the way.<\/p>\n

We can also take some comfort that as share prices are still some way below the 2021 peak, the market is far from overheated, despite appearing to be at a \u201crecord high\u201d on the surface.<\/p>\n

Mark Lister<\/a> is Investment Director at Craigs Investment Partners. The information in this article is provided for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision Craigs Investment Partners recommends you contact an investment adviser.<\/p>\n","protected":false},"excerpt":{"rendered":"At first glance, this would all suggest that our market has regained all its lost ground, surpassed the…\n","protected":false},"author":2,"featured_media":150494,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[13212,138,3278,2959,56387,702,81692,32573,111,139,69,13979,1974,34381,223,6923,4276],"class_list":{"0":"post-150493","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-13212","9":"tag-business","10":"tag-facts","11":"tag-high","12":"tag-isnt","13":"tag-it","14":"tag-lister","15":"tag-mark","16":"tag-new-zealand","17":"tag-newzealand","18":"tag-nz","19":"tag-nzx","20":"tag-record","21":"tag-seems","22":"tag-the","23":"tag-what","24":"tag-why"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/150493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=150493"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/150493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/150494"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=150493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=150493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=150493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}