Capital Thursday, May 19, 2016 Section D Markets NZ stock market in tip-top shape sthe benchmark S&P/ “In the next year or two, we expect NZX50 share index heads NZX boss Tim Bennett doesn't believe the sharemarket is over- to see agood mix of New Zealand towards yet another record businesses come to the market in the A high, NZX chief executive valued; he says it is poised for further growth, as Jamie Gray reports mid-sized businesses —inthe range Tim Bennett says the market is in of $300 million to $700 million,” great shape. Bennett says. The index built on an already As the sharemarket enters another strong 2014 to end last year with a year of very strong gains, analysts 13 per cent gain. fear it is looking overvalued from a Concerns about an economic price-earnings perspective but slowdown in China led to convul- Bennett is dismissive. sions in domestic and world markets “It’s all relative,” Bennett says. “New in February, but investors seem to Zealand is an attractive market. We have put their worries behind them have got avery strong economy. We for now. have got businesses that are paying “The sharemarket is in great relatively high yields and with agood shape,” Bennett says. ``We have seen, mix of companies to invest in.'' over anumber of years, avery strong The common complaint from fund performance in the index. We are also managers is that not enough IPOs seeing alot more interest in the initial have come to the market to meet public offer (IPO) pipeline this year investor demand. Bennett does not than last year.” expect to see the number of new Globally, 2015 was aslow year for share issues racing away anytime IPOs. In the United States it was the soon. slowest year since 2009 and New “By and large, we have seen some Zealand felt the impact of that. quality companies list in New Zea- Bennett and investment bankers land, and investors who have had a pointed to the successful listing of diversified portfolio have done very Tegel as an important milestone for well out of that, so we are very the market. “In alot of ways, it (Tegel) pleased with what has happened in was abellwether and we hope that the market over the last few years,” it will open the IPO window over the he says. next couple of quarters,” he says. After the partial privatisations of The NZX has seen an increase of the big power generators —Meridian, debt issuance on the local market. Mighty River Power and Genesis — “Trading activity in the debt market Bennett says big listings in the years is up 60 per cent, year on year, so ahead would be few and far between. there is obvious investor demand But in terms of future trends, he there as well,” says Bennett. expects to see some of the foreign- He says the NZX launched more Tim Bennett says we have astrong economy and an attractive market. Picture /Michael Craig owned local businesses start to come exchange traded funds (ETFs) last back to the market. year and the NZX now has 23. Interest pipeline develop. “While we don’t sellers’ side they are wanting to raise seeing some private equity investors And Bennett expects to see more in those products continued to be think that we will have aspectacular capital to grow their businesses, looking to realise their investments.'' of the medium-sized privately held strong. year like we did in 2013/14 —when which is good for the economy. “The caveat to all that is that we companies —inthe $300 million to Bennett says demand for initial the mixed ownership models listed “We are also seeing foreign in- still live in avolatile world, with two $500 million bracket —coming to the public offers from investors is clearly —clearly there are alot of investors vestors looking to divest their New IPOs pulled last year because of mar- evident and we are starting to see the who are seeking IPOs and so from a Zealand assets and of course we are ket volatility. continued on D4 Turningdistance into anadvantage Leading investment banker Scott St Youhave got afew world is staring down the barrel with “You have got afew champions John is upbeat about the prospects demographic changes and ageing who are growing their businesses for the New Zealand economy and champions whoare populations, we are striding into a from New Zealand,” he adds. “The markets saying the “tyranny of dis- very low interest rates environment obvious listed examples are Xero and tance” has turned into an advantage. growingtheir businesses ...that is going to create challenges. Fisher and Paykel Healthcare. “New Zealand continues to be a “Add to that the interesting pros- “Auckland Airport and Air New wonderful place to be and live,” says from NewZealand. pect of disruption in its various forms, Zealand are also seeing the benefit of St John who is managing director of Ithink it argues for active manage- the investment they have made in NZ First Capital. “I think the rest of Scott St John ment —not so much in the sense of route development.” the world continues to wish it had our trying to pick winners —but more St John says the continued re- problems. Ithink immigration and importantly in terms of avoiding structuring by global investment tourism opportunities will continue potholes. The returns one has derived banks is also creating more opportun- to grow faster than most people think, in the past will, in my view, not ities for homegrown talent. for longer than most people think. necessarily be apredictor of the “We are continuing to hire talent “The tyranny of distance has now returns one will receive in the future ... this is abig advertisement for turned into an advantage and in an projections of three million tourists “We have alot to offer ...peace and from various assets or asset classes.” locally based deep-rooted resource infrastructural sense Ihope we are coming to New Zealand each year. lack of crowds being two relatively St John says meaningful trans- on the ground,” he laughs. bold enough and aspirational enough “You don’t need to travel too far to attractive elements.” actions are proposed or executed — Though there continues to be to capture that opportunity.” see what those numbers could mean.” St John underscores his upbeat pointing to the proposed NZME/ some “fly in fly out activity” from He supports the Government’s an- Italy has close to 50 million visitors outlook with some caution: “In that Fairfax NZ merger and Sky City’s service providers, he says, locally nouncement that it intends to invest each year, with Venice attracting last six months there has been alift capital-raising “in the last week or so based support will provide astronger in tourism infrastructure to underpin more than 30 million tourists alone. of activity, but at atime when the alone”. resourcing model. —Fran O’Sullivan D2 nzherald.co.nz | The New Zealand Herald | Thursday, May 19, 2016 Capital Markets Doing the right thing Inside by the customer he International Monetary No longer Wild Fund (IMF) is making two After the finance company debacle, New Zealand securities visits to New Zealand this The benefits of amore robust T year —the first in August to regulation has concentrated on enlivening the capital markets and regulatory regime have become assess the banking and insurance clearer, says Rob Everett —D8 sectors and the second in November building renewed customer confidence, writes Jim McElwain to check out our securities regulation. The visits are part of the IMF’s Financial Sector Assessment Pro- gramme. This process was last undertaken in 2003, well before the Global Fin- ancial Crisis transformed the world’s regulatory landscape. The IMF will be looking at inter- national best practice. New Zealand was offered a“two paths” moment Soaring angels when we sat down to write the Financial Markets Conduct Act Angel investment is playing an (FMCA), hard on the heels of our own important role in growing the version of the GFC —the finance economy —D10 company debacle. We could have gone the way of the North, writing thousands(or, in the case of America,literally millions) of pages of heavily prescriptive regu- latory code, overseen by an alphabet soup of regulatory agencies. INFINZ Fellow and Chair of our Advocacy Committee, Ross Pennington, notes that we have opted for anew approach, based on enliv- ening the capital markets and The futures of dairy attracting confident participation in them. This new law is principles- New contracts away to lessen the based and the guiding principle is volatility in milk prices —D14 conduct (translated basically as doing the right thing, especially by your customers). The sort of novelty adopted in our Infinz executive director Jim McElwain with Maree Webster (left) and Lady Deborah Chambers at the 2015 Infinz Awards. approach to securities regulation isn’t particularly new in New Zealand. We against the extent to which they have have lent against the tide in estab- assisted in achieving the client’s lishing central bank independence; It’s about doing the objectives and contributed to de- Crown fiscal transparency; the velopment of the capital markets and world’s only traded interbank bench- rightthing. the wider economy. mark; listed debt and equity issues off To assist the market in establishing terms sheets; Open Bank Resolution; Sir John Anderson better practice in conduct and cul- the New Zealand Debt Management ture, INFINZ has partnered with the Room at the inn? Office and New Zealand Local Gov- Financial Markets Authority and the ernment Funding Agency; and CFA Society (an association of invest- Tourism growth means BZ is filling up macro-prudential restrictionsto ment professionals) to hold an after- fast, writes Anne Gibson —D18-20 quieten asset bubbles while keeping And leadership is crucial.