Capital markets under review

The NZX and Financial Markets Authority are reviewing the country’s capital markets with a view to boosting the number of new listings.

Thursday, January 24th 2019, 2:15PM

Rob Everett

Capital Markets 2029 is designed to deliver a 10-year vision and growth agenda for the sector.

Capital Markets 2029 will consider the current framework and broader ecosystem of New Zealand’s capital markets and outline recommendations for the creation of wider, more active participation and increased diversity of product.

The stock exchange operator said in a statement that while capital markets had performed well in a number of areas, such as KiwiSaver and debt issuance, equity listings have remained subdued, and listed equity market is under developed relative to global peers.

In the year to October 30, the NZX had just one primary equity listing. NZX chief executive Mark Peterson said: “Healthy capital markets are essential for New Zealand’s economic growth. Capital Markets 2029 will bring the capital markets community together to create a 10-year vision and growth agenda for our industry.”

FMA chief executive Rob Everett commented: “This review responds to concerns expressed about the overall depth and breadth of our capital markets. From early-stage capital raising and investment opportunities all the way up to main board listings and institutional investor appetite, we felt the time is right to plan for the future. We are keen to see the industry take this forward and take a good look at how the system is working.”

Martin Stearne, who has had an extensive career in capital markets, will chair the Capital Markets 2029 industry-working group.

Last year, fund managers Elevation Capital launched an attack on the NZX, calling on it to sell its fund business and focus on doing fewer things better, with improved transparency.

It said the underperformance of the NZX versus the S&P/NZX50 Index between 2012 and 2017 had cost shareholders $235 million in returns. It said suboptimal capital allocation had resulted in poor returns on invested capital.

That had been exacerbated by poor operational performance and cost control and NZX shares had underperformed the domestic market and global peers.

Tags: NZX