NZX upbeat on growth despite global 'blip' concern
The New Zealand stock exchange is confident the number of companies listing on the capital markets will continue to grow, as its interim profit rises to $7 million.
But rising global geopolitical uncertainty and New Zealand's own general election next month could also see a "blip" in activity over the next year, chief executive Tim Bennett says.
The exchange yesterday announced its net profit was up 8.3 per cent for the six months ended June 30.
Strong growth in its capital markets and agri-information businesses saw revenue increase 2.8 per cent, to $31.2m.
Bennett said activity on the exchange continued to grow, with seven initial public offerings (IPOs) so far this year, and more to come.
He also expected more listings would be announced later this year.
"It's exciting that these companies have chosen listing over other capital-raising options."
In the half-year Genesis Energy, Inturei Education Group, Serko, and Gentrack had all listed, while IkeGPS, Scales and Metro Performance Glass had also gone public since June 30.
A total of $3.52 billion was listed during the first half of the year, down slightly on the same period last year, when Mighty River Power was listed.
The NZX said listing fees associated with IPOs had pushed revenues up during the current period, but would also provide recurring listing, trading and clearing revenues for the exchange.
But listings revenue of $6.2m was the biggest earner for the exchange, up 10.7 per cent on the same period a year ago.
A presentation by the exchange said a $400m company listing earned the NZX $210,000 initially, falling to $85,000 a year thereafter.
Bennett, however, said the NZX was confident IPO activity would continue, even if there was a "blip in the next 12 months".
"We've got a strong desire for KiwiSaver managers to invest in New Zealand, and secondly we're having very good dialogue with a large number of private companies about using the listed market as a way to raise capital, and I think both of those factors will continue for some time."
But growing geopolitical uncertainty, and New Zealand's general election in September, would create some caution among investors and potential company listings, he said.
The NZX's new market for small and mid-sized businesses would probably launch in the fourth quarter of this year, Bennett said.
That would have a limited impact on 2014 results, but would eventually provide a stream of companies migrating to the main board.
"We're seeing the benefits of key structural changes occurring in New Zealand, including the increase in KiwiSaver funds, which continues to drive demand for investment products including through the public markets.
"Meeting this demand by ensuring there are more products for people to invest in remains a key strategic priority across NZX."
The NZX's agri-information business saw revenue increase 5.4 per cent on the same period a year ago, driven by increased advertising revenue.
That demonstrated greater confidence in the sector following the severe drought in the first half of 2013, the NZX said.
But market operations revenue was down 14.8 per cent, because of reduced energy consulting work and the loss of a gas market contract.
Costs also increased 4.3 per cent to $19m, because of increased contractor costs, and more staff.