NZX backs partial privatisation call

Partial privatisation of state-owned enterprises, an unwillingness to allow local opportunities to go offshore, and a compulsory superannuation savings scheme would all contribute to the health of New Zealand's capital markets, NZX chairman Andrew Harmos says.

Speaking at the local exchange operator's annual meeting in Wellington this morning, Harmos said the advent of NZX's new clearinghouse system in the next few weeks would be a huge boost to the exchange's capacity to offer new investment products and to grow.

"Without a clearinghouse, our market operates with one hand tied behind its back," Harmos told the sparsely attended meeting at the NZX headquarters.

"It will grow local capital market participation."

However, there were wider issues holding back capital market growth, in particular the "limited amount of quality investable opportunities" available to New Zealanders in their home market.

His comments followed a speech prior to the meeting by Air New Zealand and Solid Energy chairman John Palmer, who expressed a personal view that partial privatisations should be pursued, and could be managed politically if appropriately uncontroversial assets were involved and government majority ownership was retained.

"The Crown should leverage its current investment (in SOE's) with externally accessed capital," said Palmer.

Harmos cited as problems high levels of business ownership by central and local government, while much of the country's economic backbone, rural sector assets, was tied up in cooperative ownership.

"New Zealand is an outlier" compared to other developed economies because of its high levels of government and cooperative ownership, he said.

He contrasted this with Australia, where the backbone industry - mining - actively sought capital from public markets.

"We don't even have sufficient capital compete for our own strategic assets," Harmos said.

NZX chief executive Mark Weldon said the SOE sector was "a big part of the economy" and it was "critical that it is got right".

Weldon told the meeting that the NZX's growth over the next two to three years would come from its investment in the clearinghouse facility, which would allow NZX to start offering new derivatives products, such futures and options.

The clearinghouse development completed the "recrafting" of NZX over the last three years, and while the exchange did not expect straight-line profit growth, it anticipated continuing to deliver compound annual profit growth at levels similar to previous years.

In his remarks, Harmos touched on NZX's losing out to its Australian rival, ASX, to run the EnergyHedge electricity derivatives platform for the five big electricity generators - an opportunity NZX tried hard to win.

While he meant no direct criticism of the EnergyHedge board for its decision, Harmos said "there is a disconnect between policy and action and a disregard for second order effects on too many occasions" in New Zealand.

"Too often decisions are made that make it hard to break out of branch office mode. We don't take every opportunity to build scale here," said Harmos, who doubted the EnergyHedge decision would ever have occurred in Australia. NZX's attempts to establish an alternative share trading platform have been stymied, it believes, by political intervention to protect ASX's interests.

Harmos struck an unexpected note by playing the meeting excerpts from a speech given in the 1960's by the radical African-American icon, Malcolm X, warning black people that if they didn't invest in their own communities, then someone else would, and would take the profits elsewhere.

He also suggested that New Zealanders were "ready for some level of compulsion" for retirement savings, as long as it was phased in.

Businesswire.co.nz

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Printable version

Related News

NZX carbon registry sale completed
NZX trading in debt securities tumbles 41% in October
NZX third-quarter sales rise 14%, driven by agricultural data, listings, clearing
NZX monthly trading growth slows in September after August spike
NZX normalised first half profit up 42 pct
FMA completes NZX inquiry
NZX clarifies ceo evidence
FMA asks NZX about Clear Grain statements
Daily ShareChat: NZX
NZAX trading dwindles, highlighting lack of risk appetite

Get quotes for NZX Limited Ordinary Shares (NZX)

NZX Annoucements for NZX