More vibrant equity capital markets may be on the horizon for New Zealand – but not this year, Chapman Tripp says.
The firm today released its annual Equity Capital Markets – trends and insights report, which tips 2018 to be a transitional year to healthier capital markets from 2019 and beyond.
"2017 was a mixed bag for our equity capital markets," said Chapman Tripp partner Rachel Dunne.
"On the one hand, we had strong market performance – the NZX 50 outperformed a number of overseas indices such as the ASX 200 and S&P 500 – and booming levels of secondary capital raisings ($3.1bn in 2017).
"And on the other – as we predicted – the NZX Main Board shrunk, with eight delistings, driven mainly by takeovers and insolvencies, and only one IPO, Oceania Healthcare. There were also no compliance listings, no listings on the NXT Market and no good news on the listings front."
And Chapman Tripp expects this trend to continue into 2018, she said.
"We expect this year to be much like 2017, with continual shrinking of the NZX Main Board and sluggish IPO activity – though that, of course, depends on the broader business ecosystem, particularly for the listings pipeline.
"But, we see 2018 as a bridging year to more vibrant capital markets in New Zealand from 2019 onwards; thanks to a number of factors, including NZX's Listing Rule review, a strong regulatory framework and robust private equity pipeline."
She is excited about NZX's new strategic initiatives announced to market.
"These demonstrate NZX is more than prepared to tackle some of the tough issues that are facing our capital markets, such as on-market liquidity and transparency of trading.
"We are also pleased to see NZX is listening to feedback from the investment community about the structure of the equity boards, signalling its intentions to consolidate the NZAX and the NXT Market into a single NZX Main Board.
"Another positive from NZX's strategic review for capital markets is in product innovation. NZX intends to develop a tailored set of rules to manage investment schemes, which should hopefully contribute to new listings in 2019."
The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.