• Both the S&P ASX/200 and S&P/NZX 50 fell in September amid global inflation and recession concerns
  • Equities on both sides of the Tasman Sea managed to hold on to their Q3 gains despite steep losses in September
  • Fixed income indices outside of treasury bills lost ground both in Australia and New Zealand in September

For some, it’s a gentle rivalry. For others, it’s an ongoing feud that steadfastly refuses to be settled – like the Hatfields and the McCoys, if they lived on either side of a very, very wide creek and one family spoke with a weird accent and said “bro” a lot more than could be plausibly defended.

But for us here at Stockhead, the ongoing quest to be better than our neighbours across the Tasman at as many things as possible is something that drives our urge to crunch the numbers, wade through the data and analyse things more closely than a short-sighted science nerd.

And that is why, starting from today (because we only just thought of it late, late last night) we bring you the ultimate in full-contact financial competition.

It’s Kangaroo vs Kiwi, Wombat vs Weta, and Kookaburra vs Kakapo all rolled into one – a veritable Bledisloe of the Bourse, if you will – to find out whether it’s Australia or New Zealand who gets crowned Best in Show for Market Performance, every single month until we lose a few on the trot and pretend this never happened.

Everyone here is excited, the referee (certified Not French) is ready to blow his whistle, so let’s stop with the waffling and get down to brass tacks to see whose numbers have stacked up best, between the ASX and the NZX.

And the winner is…

While the race for bragging rights in August was too close to call, both share markets fell in broad global sell-offs in September. However, the  S&P/NZX 50 fell not quite as steeply, according to data released by S&P Dow Jones Indices, a financial market benchmark provider.

Australia’s S&P/ASX 200 fell 6.2% in September giving back most of its Q3 gains to finish the quarter up 0.4%. Equities dropped across the capitalisation range in September with small caps faring the worst as the S&P/ASX Small Ordinaries plunged 11.2%.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 portfolio fared slightly better than its large-cap peer in Australia both for September and the quarter, as it shed 4.5% in September and gained 2.3% in Q3.

While all S&P/ASX 200 sectors dropped in September, six out of 11 ended the quarter in the black, with energy the best performer, up 5.9% in Q3.  Utilities pulled at the rear for both the month and the quarter, down 13.8% and 12.5% for September and Q3, respectively.

And when it comes to factor investing, at the back of the pack was equal weight, down 9.3% and underperforming the capitalisation-weighted benchmark by 3.1% – the worst relative monthly performance since November 2013.

Momentum on the other hand, led for both the month and the quarter, ending Q3 with a 6.1% gain.

Benedek Vörös, director, Index Investment Strategy at S&P Dow Jones Indices notes that equities on both sides of the Tasman Sea managed to hold on to their Q3 gains despite steep losses in September.


Fixed income hit hard

Fixed income indices outside of treasury bills lost ground both in Australia and New Zealand, with inflation-linked bonds in Australia and New Zealand hit particularly hard.

Outside of Bills, regional fixed income indices all finished the month in the red.  In Australia the S&P/ASX Government Inflation-Linked Bond 0+ gave up 3.8%.

Reflecting jitters in regional equity markets the S&P/ASX 200 market volatility index (ASX:VIX) jumped 6 points higher in September to close the quarter at 21.

Source: S&P Dow Jones Indices


Rate sensitive stocks fall in September

BetaShares chief economist David Bassanese told Stockhead it was a sea of red in September across both equities and bonds on the ASX and NZX across both equities and bonds.

“The theme of the month was continued aggressive central bank tightening expectations saw equities and bonds down,” he said.

“In the equities space it was quite apparent that the more interest rate sensitive sectors did the worst, so you have real estate and information technology down, while the best performer was the materials sector.”

He said inflation-linked bonds did a little worse in the month as real yields increased by more than nominal yields – with the implied inflation expectation priced into nominal bonds easing.

“What we saw is that the increase in the interest rates in the month was mainly in real yields rather than in expected inflation,” he said.

“So it came back to central banks being hawkish, raising real rates and keeping longer term inflation expectations contained.”

He said New Zealand had already priced in a lot of interest rate rises already so he was not surprised to see it do marginally better.

“It was a question of us catching up a bit to them,” he said.