The NZX ended the year up 13% for the year but Craigs Investment Partners broker Chris Timms said there was more to the figures than just market growth.
The year started with people expecting a flat year on the NZX after strong preceding years.
There were expectations of an interest rate rise and an economic slow down. But neither of those arrived.
‘‘While the year started off with an interest rate rise, rates soon came back.
''All the preceding years of hard work by companies on their balance sheet during the global financial crisis left them in good order.
''People who are not traditional investors have gone to the market for income rather than having the money in term deposits.''
There had been some ‘‘stunning movements'' for some companies.
They included the top performers of: dairy company A2 Milk whose shares rose 255% in value this year, Refining New Zealand up 67.4%, Nuplex up 59% and Chorus and Z Energy both up 46%. The worst performers were Orion Healthcare down 46% and Kathmandu down 28%.
Companies had adopted a prudent approach to debt, keeping it at levels where it was easily serviced, he said. That allowed them to increase profitability and cash flow, and increase dividend payments, or income.
Excluding anything major happening in the world's geopolitical situation, investors had become more resilient and were less likely to be spooked by sudden market movements.
‘‘My initial worry was the new entrants would come into the market looking for income but once interest rates rose, they would be looking to exit.
‘‘Anybody in the market for the last five to six years, who purchased good quality stocks and held them. has received the benefits of growth in income and in the share price.''
Interest rates would inevitably rise but Mr Timms hoped the investors who had done well in the sharemarket would remain rather than shifting out to term deposits.
The New Zealand economy remained strong and local ‘‘leaner more agile'' companies were in a position to reap the benefits from economic growth, he said.
Global equity markets are likely to move moderately higher this year. Generally accommodative monetary policy, improving global economic growth and subdued inflation should support equity markets.
China was expected to be the fastest growing economy of the major OECD countries. Its gross domestic product growth was likely to expand at more than twice the rate of the US.
In Australia, sectors with a negative 2016 earnings outlook included metals and mining, oil and gas and mining services. While some companies might look attractive, the sectors should be treated with caution.
