NZX sees profit slip as listings vanish

The New Zealand Exchange yesterday put a brave face on the rash of departures from the stock market, declaring a "significant pipeline" of flotations would offset the loss of fees.

Slowing market turnover, fewer new listings on the main board in the first half of the year, as well as costs linked to the collapse of Access Brokerage last September, knocked net profit for the six months from $2.03 million to $1.47 million.

NZX chief executive Mark Weldon said the second half of the year would be more robust. And, the exchange believes further privatisation of state-owned assets and other listings would underpin the market's long-term future.

But NZX shares yesterday fell 5c to $7.65 - well off their peak of $10.50 in March.

Observers said the exchange faced a challenge arresting the loss of companies from the main board. Over the last six months, it has lost eight - with a combined market value of $4.8 billion - including Ports of Auckland and former publisher Independent Newspapers.

Trading activity in the first three months of the year was strong, but since then the volume of trading has declined every month.

In early May, the benchmark NZSX-50 index hit a six-month low of 2900. But the spate of takeovers has since helped lift the index to a record last night of 3357.97.

NZX did not quantify the lost income from the departures.

But it said the recently delisted Ports of Auckland generated $17,000 in annual trading revenue and $33,000 in annual listing fees.

Carter Holt Harvey, which is up for sale, generated around $148,000 in annual trading and listing fees.

Weldon said the takeover activity was not healthy for the market.

"It deprives New Zealand investors of the opportunity to invest directly in these companies. It deprives the market professionals of underlying product upon which they can base their business and for NZX it narrows the range of product available on the market.

"There does, however, exist a significant pipeline of companies that are ready or preparing to come to the market in New Zealand over the next couple of years."

Weldon was confident future governments would consider privatising state-owned companies, while the listing of agricultural co-operatives - a reference to Fonterra - was also a possibility.

He said NZX had not spoken with any political parties about privatisations, nor with Fonterra.

The Access Brokerage collapse cost NZX $344,000 in the six months and these costs would continue to mount as the wind-up continued.

Weldon said Access liquidator Ferrier Hodgson had not yet indicated whether it would pursue the NZX over the collapse. Ferrier Hodgson declined to comment.

The results were also hurt by a $360,000 writedown in a futures trading agreement with the Sydney Futures Exchange.

Sales rose from $7.6 million to $8.6 million and core operating expenses rose from $5.02 million to $5.82 million, reflecting investment in NZX's Smartshares fund management arm and investments in its trading platform.

NZX said it would examine whether to pay a dividend at the end of the year.