NZX vs ASX Which Should You Buy?

NZX and ASX stocks are popular choices among investors looking to diversify their portfolios with exposure to companies based in New Zealand and Australia, respectively. While both stock exchanges offer a range of investment opportunities, there are key differences to consider. NZX stocks may provide unique exposure to industries such as agriculture and tourism, while ASX stocks offer access to a larger and more diverse market. Understanding the nuances of each exchange can help investors make informed decisions when building a well-rounded investment portfolio.

NZX or ASX?

When comparing NZX and ASX, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between NZX and ASX.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. NZX has a dividend yield of 4.09%, while ASX has a dividend yield of 3.18%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. NZX reports a 5-year dividend growth of 5.81% year and a payout ratio of 83.61%. On the other hand, ASX reports a 5-year dividend growth of -1.52% year and a payout ratio of 89.32%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with NZX P/E ratio at 19.94 and ASX's P/E ratio at 29.03. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. NZX P/B ratio is 3.96 while ASX's P/B ratio is 3.40.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, NZX has seen a 5-year revenue growth of 0.37%, while ASX's is 0.40%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with NZX's ROE at 20.76% and ASX's ROE at 11.85%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are NZ$1.48 for NZX and $43.06 for ASX. Over the past year, NZX's prices ranged from NZ$0.97 to NZ$1.53, with a yearly change of 57.73%. ASX's prices fluctuated between $36.16 and $46.27, with a yearly change of 27.96%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.