Stock exchange operator NZX said its net profit shot up by 40.9 per cent to $9.1m in the six months to June 30, reflecting a significant increase in demand for capital and an unprecedented lift in share trading during the Covid-19 lockdown.
At the operating level, NZX's earnings rose by 21.5 per cent to $17.6m.
NZX said it was maintaining its full-year operating earnings guidance of $30m to $33.5m.
Based on the performance to date, there was a greater expectation for a full-year outcome to be towards the top end of the range.
Chief executive Mark Peterson said the pandemic "brought into sharp relief the vital role of New Zealand's Exchange, and the value of being listed – ready access to new equity capital".
Nearly $6 billion of equity was raised by a broad range of companies, from Auckland Airport's $1.2b and $207m by Kathmandu to some of NZX's smaller issuers also being able to effectively access the market for further capital – Enprise raised just over $1m and Cannasouth $6m.
Peterson said this flowed through into a significant increase in secondary market trading for the half-year, which was reflected in NZX's financial results.
"While we have had to adjust to a very different business and working environment and reassess priorities as a result of Covid-19, our focus has been on meeting increased demand through a time of need from our customers, and this shows in the lifts achieved in revenue and operating performance," he said.
NZX declared an interim dividend of 3 cents a share fully imputed, payable on September 18.
NZX's first half net profit rose by 40 per cent. Photo / File
Peterson said his team were "acutely conscious that we cannot yet see the full consequences of Covid-19".
"Significant underlying challenges remain for many companies locally, from the ongoing global health threat and related operational and financial impacts," he said.
"This is a time of critical need for our customers and country, requiring further collective action, adaptation and innovation at pace."
Chairman James Miller said the level of capital raisings was larger than the initial months after the 2008 Global Financial Crisis.
"This action by companies has undoubtedly helped save many jobs in New Zealand and, to some extent, softened the economic shock for our country," Miller said.
The half-year saw a continuation of capital raisings through placements, share purchase plans and rights issues – including under innovative structures rarely seen in New Zealand, such as the accelerated nonrenounceable entitlement offers, enabled under relaxed rules provided by NZX Regulation.
The total value of capital raised in the first half of 2020 was up 6.5 per cent to $8.2b, with new retail and wholesale debt listings making up $2.3b and the balance being $5.9b of secondary equity capital – mostly to address the impacts of Covid-19.
The NZX debt market started the year well, with issues from BNZ, Housing New Zealand and the Local Government Funding Agency, before several months of disruption from Covid-19.
Peterson said there had been "exceptionally high" levels of activity on the sharemarket, along with continued strong levels of international interest in the market.
The S&P/NZX50 had proved a relatively resilient index – by June 30 it had recovered more than 34 per cent from the low-point of March 2020 and outperformed other major global indices year-to-date.
The daily number of trades surged to an average 48,000 across the first six months of 2020, and by early June the total number of trades had surpassed the full-year 2019.
Value traded on NZX's markets also set new records, jumping 52.3 per cent in the first half to nearly $28 billion.
On-market trading continued its positive trend, averaging 62.4 per cent across the half-year. This compares with 33 per cent in 2015 and 54.3 per cent in 2019.
The lift in on-market trades was in parallel with an increase in retail investor participation.
Peterson said the popularity of online retail trading platforms is burgeoning and, over the Covid-19 Alert Levels 3 and Level 4 in New Zealand, helped spur retail participation to levels "never seen before in our sharemarket".
NZX secondary market trading by retail investors totalled around $2.1b for March and April 2020, up 135 per cent on the same period in 2019.
The number of trades climbed 361 per cent and is up 1264 per cent over the past five years, assisting the growth of market liquidity.
The marked acceleration in the growth in trading activity – with daily trading volumes peaking at almost six-fold the 2019 daily average – exposed some stresses within specific elements of the market infrastructure, particularly on certain messaging components of NZX's clearing and settlement system.
NZX has commissioned an independent review of the technical issues and the underlying causes. This review has sought feedback from market participants and has received extremely strong engagement across all aspects of the market.
AFter the large boost last year in the assets held in the depository, NZX had further growth in the first half. Total value closed at a new high over $3.7b, reflecting increasing values from Sharesies and BNP Paribas Securities.
NZX Data and Insights achieved a strong lift in revenue, up more than 10 per cent to $7m, largely due to royalties for retail data access.
Volatility from Covid-19 seen in equity markets also flowed into dairy markets, where the total volume of lots traded was up nearly 10 per cent to 205,626.
The first quarter of 2020 was the largest trading quarter since the market was launched.
Volumes of NZ Milk Price derivatives continued to grow. Lots traded were up 80 per cent on the previous period, and the average daily value of trades reached a record $4 million in the second quarter of 2020.
NZX shares last traded at $1.53, having gained 27 per cent over the past 12 months.
