The boss of New Zealand’s stock exchange has compared local companies listing across the Tasman to “welcoming Australians into an All Blacks training camp and allowing them to take our best players”.
Speaking at a Trans-Tasman Business Circle panel event in Auckland this afternoon, Tim Bennett called on Kiwis to be more nationalistic about this country’s sharemarket.
He said New Zealand would never allow Australia to take members of a national sports team.
“But we seem quite happy to do that with some of the companies that we promote for listing in Australia,” Bennett said, adding that the NZX needed to be viewed as a “national asset”.
In recent months New Zealand tech firms Volpara Health Technologies, 9 Spokes and Powerhouse Ventures have announced plans to skip the NZX and list on Australia’s ASX.
That followed Christchurch-based jetpack maker the Martin Aircraft Company’s decision to list in Australia last year.
Meanwhile, jewellery retailer Michael Hill received shareholder approval this afternoon to shift its primary listing from the NZX to the ASX.
Such moves have generated a lot of media commentary and Bennett’s comments suggest the sharemarket operator is taking to heart the loss of potential local issuers to the ASX.
That’s particularly understandable given quiet state of New Zealand’s listing and initial public offering market.
Only one IPO, chicken producer Tegel, has taken place on the NZX this year, while there have been 27 floats and listings on the ASX in the past two months alone.
But Bennett said caution was needed when comparing the NZX with its vastly bigger counterpart in Australia.
“There’s a lot of discussion about NZX versus ASX and I’d just like to put it in a bit of context,” he said. “The market capitalisation of the Australian market is about 15 or 16 times the New Zealand market.”
Bennett said ASX’s growth had not only been driven by the size of the Australian economy but also other factors such as a strong sense of nationalism around that country’s capital markets and compulsory superannuation.
The NZX did well when put up against more comparable exchanges such as those in Denmark, Turkey, Norway and Israel, Bennett said.
New Zealand Superannuation Fund head of investments Fiona Mackenzie, who also joined the panel, said the $30.3 billion fund was concerned about a lack of liquidity growth in the local market.
“We think some of the key areas to focus on there would be diversity in terms of market participants [including] brokers, fund managers and listed issuers,” Mackenzie said.
She said New Zealand was a “Goldilocks market” when it came to IPOs, which was a challenge for increasing the number of listed issuers.
“Absolutely everything has to be right [to get an IPO completed],” Mackenzie said.
She said there was much room for improvement when it came to corporate governance in New Zealand.
“We’re engaging with companies both individually and via the Corporate Governance Forum,” Mackenzie said.
Gareth Morgan Investments chief investment officer Simon O’Grady said a concerted effort, including through tax policy, was needed to improve access to this country’s capital markets.
“There’s going to be at some point in the next few years … a London or New York of Asia somewhere and we need to be part of that environment,” O’Grady said.