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Health & Fitness

International Investing - New Zealand

Sean Stein Smith MBA, CPA, CMA, Neighbor

Posted Thu, Nov 7, 2013 at 9:17 pm ET

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surroundings – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside the United States that you might not usually hear about.

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

New Zealand

Many people have scenic images of New Zealand whether they explicitly realize it or not – the vast majority of the Lord of the Rings movie series was actually filmed in New Zealand. The varying geography and pristine condition of it made for a perfect backdrop. If that, however, is the extent of what you know about New Zealand there is a large amount of information that you are missing out on. New Zealand is well located to benefit from growing economics in nearby Asia as well as Australia, and additionally, has a very pro-investment national government.

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As mentioned above, one of the largest benefits to investing in New Zealand is the proximity that the nation has to both Southeast Asia and Australia. This position, between two areas that have experienced rapid and sustained economic growth, has made New Zealand an obvious place for foreign capital to be put to work. A simple and concise tax system has made New Zealand more attractive in light or rising uncertainty in regards to taxation policies in other nations. The country also has attained the following rankings: #1 in the world for protecting investor, #1 in the world for lack of corruption, and #1 in world for starting a business. These ranking were issued by the World Bank and pulled from the Transparency International Corruption Index.

When looking at investing in New Zealand, there are two primary ways to go about it – ADRs or direct purchases. An ADR is basically a certificate held by a U.S. banking institution that represents a certain number of shares in the foreign company, and is held by the U.S. institution. This helps to cut down on the administrative fees and other costs that would otherwise be incurred. For more direct exposure, you can also purchase shares directly from New Zealand stock exchanges if your broker offers those services to its retail investor base (you and me).
Some of the largest and most liquid ADRs that are available for investors to utilize in order to invest in New Zealand are Air New Zealand (ANZFY), Cavalier (CVLRY), a construction firm, Chorus (CHRYY), a telecommunication firm, and Contact Energy (COENY) an electric utility. For investors looking for an ETF that tracks the New Zealand economy, the iShares MSCI New Zealand Investable Market Index ETF (ENZL) is an option worth exploring.