Reviving the NZX a tough but worthy task

Sunday, 21 April 2019

Buying shares can be a good way to invest, but what if the companies just aren't there?

OPINION: I've got to that scary stage of life when I'll have to use more than just my piggy bank to seriously save enough for my old age.

I'm not a baby boomer so didn't engage in, as National Party leader Simon Bridges put it, 'the Kiwi way of life' and buy rental properties.

Instead, I thought I would dabble in shares and I discovered two things: it's far more complex than I thought, and buying shares is not a new thing.

In fact it goes back 150 years, in New Zealand. Our stock exchange was set up in Dunedin in 1866 on the back of the gold rush.

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The Stock Exchange Association of New Zealand, now NZX, was formed in 1915. Aside from gold, back then we were investing in banks, insurance, shipping and freezing companies.

A big moment in history was when the long lunches of champagne and chardonnay literally crashed for many Kiwis after the infamous 1987 stock market crash.

But it also resulted in a tidy up of the exchange: more qualified brokers, reviewed listing rules and a new corporate body.

It makes sense to me that if I'm going to try and save for my retirement, it should be invested in supporting smart Kiwis doing cool things.

But as per my number one discovery: it's not that easy.

NZX may be 150 years old but the world is changing and in a global economy not only do rugby players leave for more money, so do our best and brightest.

Think Xero, now listed on the Australian stock exchange, so technically no longer ours.

Instead our neighbours will reap the potential rewards even though it was us Kiwis that backed them setting up.

Then there is the Government's darling, Rocket Lab.

Who wouldn't love to have bought shares in a rocket company? But it went international and got American backing.

We were all pretty impressed with Sam Morgan creating Trade Me, which would have been a fantastic business to invest in, had we had the chance.

Instead it was sold to Fairfax and was listed on the ASX and NZX in 2011.

Travel software company Serko is one of several technology companies that listed on the NZX in 2014 and has made money for investors, but since then new listings have gone quiet.

So now that I'm taking a bit more notice of where to invest, I'm seeing how New Zealand keeps losing control of Kiwi companies.

Trade Me is changing hands again and will delist from the NZX on May 2, and Restaurant Brands is also under takeover pressure.

So our 150 year-old stock exchange has got big challenges if we're losing good companies to foreign owners and not getting new listings to replace them.

It's also got challenges with investors. Only 20 per cent of us invest directly compared to 40 per cent in Australia and 50 per cent in the US.

So how does NZX market itself to our ageing population to help them make quality investments?

Cas Carter is looking for alternatives to the piggy bank.

It says its strategy is focused around lifting the number of traded securities as well as the number of participants and investors.

In January, along with the Financial Markets Authority, NZX announced a capital market review with a committee including financial market heavy hitters from SkyCity, Tourism Holdings, Westpac and the New Zealand Superannuation Fund.

Their job is to figure out ways to increase the number of companies listed on the stock market, which fell to just 138 in December 2018 from 173 in December 2015.

It's a big job they've got ahead of them, but a worthy one if it gets more Kiwis investing in our most innovative companies.

It will also need a simple 'sell' because right now my piggy bank investment scheme seems much more simple.

Cas Carter is a marketing and communications specialist.