Growth 'looks key driver'

NZX chief executive Tim Bennett says we sometimes forget that confidence has a big part to play. Photo / Sarah Ivey

Weighty listings were last year's story- the economy could be this year's, says NZX chief.

While 2013 will be remembered as a watershed year for New Zealand's capital markets, this year is also shaping up as being an important one based on a much stronger economic growth outlook, NZX chief executive Tim Bennett says.

Last year featured 10 new NZX listings, from the Government's big power companies, to petrol station chain Z Energy to some of the smaller listings, such as technology company Snakk Media.

This year, Bennett says, strong economic growth looks like being a key driver for the capital markets.

Early this month, Westpac revised up its growth forecast for 2014 to 4.2 per cent from its previous forecast of 3.8 per cent, based on the country's high terms-of-trade performance.

Bennett said the New Zealand sharemarket's very strong performance over the past two years had prompted some to see it as being overvalued.

"Over the last two years we have had a big run-up in the New Zealand market and understandably analysts were saying that investors should be looking at opportunities offshore on a relative valuation play. Some in the market are now suggesting that this is no longer the case."

He said 2013 would also be remembered for the gathering momentum of KiwiSaver and for the growing confidence in the marketplace generally, fuelled in part by the number of big ticket listings.

As the Financial Markets Authority entered its fourth year, there was also more confidence about the regulation of the market. "While the genesis of these [regulatory] things was four or five years ago, we are just starting to see the structural impact of the changes," he said.

Bennett said confidence in the financial services industry was improving, and participants were hiring staff for the first time in a decade.

"We often look at the macro factors such as China's strong economic performance, but forget that confidence has a big part to play, and there is a high degree of confidence in New Zealand and its place in the world at the moment," he said.

Bennett said the success of the Fonterra Shareholders Fund and this year's float of Synlait Milk showed that investors could successfully gain access to what was previously the preserve of private investors.

The investment in the processing facilities - particularly in dairy - could result in more investment opportunities for private investors over 2014 and 2015, Bennett said.

The Synlait initial public offer was a good example of a successful partnership between the founder, two large distributors - China Bright Dairy and Royal FrieslandCampina - institutions and private investors.

"I think that [Synlait] provides a good model for how you can get outside investment into these sorts of growth opportunities," he said.

"This is the big challenge at the NZX - how to do we get agricultural companies to list in what has historically been a sector that has been privately owned."

NZX on Friday reported a 22 per cent rise in annual profit to $12.1 million.