Exchange eyes revamp of benchmark index

By NZPA

Thursday 29th August 2002

The Stock Exchange will change the way it calculates its benchmark index, the NZSE40.

Chief executive Mark Weldon yesterday confirmed a change was needed to better meet the needs of investors.

"What you want out of an index is for it to be as investible as possible," he said.

The NZSE40 index reflects the performance of the top 40 companies on the exchange as ranked by capitalisation, but does not account for the availability of shares.

Several companies had most of their shares locked up and unavailable to investors, Mr Weldon said.

A "free floating" model that ignored such stocks when calculating the value of an index and included only freely traded shares would give investors a better gauge of where to put their money.

But Mr Weldon stressed no final decisions had been made.

"At a minimum we will move from capital to gross and we are looking at the rest of it. We don't have a definitive or definite answer as to what we are going to change it to yet."

There were several options, including sticking with the current model.

"You've got to go with what makes the most sense and you have to be practical given the particulars and details of the companies, especially on a small market like this one."

Getting the right model was important for the exchange as it moved forward with plans to introduce new products for investors.

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