Capital Markets: Turning distance into an advantage

Scott St John, chief executive of First NZ Capital.
Scott St John, chief executive of First NZ Capital.

Leading investment banker Scott St John is upbeat about the prospects for the New Zealand economy and markets saying the "tyranny of distance" has turned into an advantage.

"New Zealand continues to be a wonderful place to be and live," says St John who is managing director of NZ First Capital. "I think the rest of the world continues to wish it had our problems. I think immigration and tourism opportunities will continue to grow faster than most people think, for longer than most people think.

"The tyranny of distance has now turned into an advantage and in an infrastructural sense I hope we are bold enough and aspirational enough to capture that opportunity."

He supports the Government's announcement that it intends to invest in tourism infrastructure to underpin projections of three million tourists coming to New Zealand each year. "You don't need to travel too far to see what those numbers could mean."

Italy has close to 50 million visitors each year, with Venice attracting more than 30 million tourists alone. "We have a lot to offer ... peace and lack of crowds being two relatively attractive elements."

St John underscores his upbeat outlook with some caution: "In that last six months there has been a lift of activity, but at a time when the world is staring down the barrel with demographic changes and ageing populations, we are striding into a very low interest rates environment ... that is going to create challenges.

"Add to that the interesting prospect of disruption in its various forms, I think it argues for active management -- not so much in the sense of trying to pick winners -- but more importantly in terms of avoiding potholes. The returns one has derived in the past will, in my view, not necessarily be a predictor of the returns one will receive in the future from various assets or asset classes."

St John says meaningful transactions are proposed or executed -- pointing to the proposed NZME/ Fairfax NZ merger and Sky City's capital-raising "in the last week or so alone".

"You have got a few champions who are growing their businesses from New Zealand," he adds. "The obvious listed examples are Xero and Fisher and Paykel Healthcare.

"Auckland Airport and Air New Zealand are also seeing the benefit of the investment they have made in route development."

You have got a few champions who are growing their businesses from New Zealand.
Scott St John

St John says the continued restructuring by global investment banks is also creating more opportunities for homegrown talent.

"We are continuing to hire talent ... this is a big advertisement for locally based deep-rooted resource on the ground," he laughs.

Though there continues to be some "fly in fly out activity" from service providers, he says, locally based support will provide a stronger resourcing model. Fran O'Sullivan

- NZ Herald

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