Stockmarket activity set to continue
The New Zealand stock exchange expects a decent pipeline of company listings this year will build on 2013's record market activity, which was the highest in more than a decade.
Yesterday the NZX reported a $12.1 million profit for the year ended December 31, 2013.
This was up 22.6 per cent on the previous year, aided by a 12.2 per cent increase in revenue to $62.8m.
Last year 10 new companies listed, a 10-year high in initial public offering (IPO) activity, resulting in new capital of $7.5 billion.
Of the money raised 63 per cent was attributable to the government's mixed ownership model listings, including Mighty River Power, Meridian Energy, and the partial sell down in Air New Zealand.
NZX chief executive Tim Bennett said he continued to think capital markets activity would be strong in 2014, despite only Genesis Energy's upcoming listing, which was expected in the first half of this year.
The profile of the companies likely to list would be quite different from 2013, however, he said.
"Genesis excluded, we are continuing to hear and see about smaller, high growth companies wanting to raise capital through an IPO.
"And for that type of investment there's plenty of demand from retail investors, wouldn't necessarily categorise them as ‘Mum and Dad', but there are a large group of active investors in the market."
Bennett said towards the end of 2013 this group was being advised to shift money overseas, but the advice was changing because of good opportunities coming to the market and a stronger domestic economy.
"That hadn't been anticipated three to six months ago."
He said early indications in January were good and activity had increased year on year.
Listed companies had generally reported in line or ahead of expectations this reporting season, he said.
"The fact that we've seen pretty good economic growth projections come out here, that will flow through into earnings for companies."
The NZX's agricultural revenue, however, fell, on the back of the worst drought in 70 years at the start of 2013.
NZX's agri revenue fell 2.9 per cent to $12m as advertising spend in the NZX's agri publications was down significantly in the first half.
"We did, however, see an uptick in quarter four, and that trend in that business has continued into the start of 2014," Bennett said.
The NZX had also reduced the carrying value of its Australian business Clear Grain Exchange by $2.4m, as revenue on the trading year fell 22.4 per cent.
The stock exchange would look to launch a new market by the middle of the year, aimed at small to medium sized businesses, filling the gap between angel and venture capital and the main NZX board.
But it continued to work with the Ministry of Business, Innovation, and Employment, and the Financial Markets Authority, to establish the regulatory framework around it.
"We'd like to make this market more attractive for smaller, high growth businesses while at the same time making sure that investors are aware that this is a different market environment."