How to save New Zealand’s shrinking stock market

New Zealand’s savings pool is growing thanks to consistent KiwiSaver contributions and better returns earned but the number of companies deploying that money domestically is shrinking, with the biggest wealth managers choosing to increasingly invest offshore instead.

“We’ve got great returns overseas, we’re getting okay returns here in New Zealand.” FirstCape chief executive Malcolm Jackson told Markets with Madison.

“As our savings industry grows, we need our capital markets to grow as well.”

FirstCape invests about $51 billion on behalf of 800,000 New Zealanders directly and indirectly – making it one of the largest wealth firms in the country.

Jackson said more than half that amount was invested offshore, where returns had outperformed, especially in the United States.

Only the top 15 listed New Zealand companies met the firm’s threshold of long-term investment requirements, he said.

“That’s not a bad thing, that’s just a natural evolution for the market.”

He suggested the Government sell down stakes in listed companies such as power companies or Air New Zealand as a way to increase liquidity in the stock market.

The market was also shrinking because fewer companies were coming on to the market and providing options for investors.

“One of the problems we have at the moment is we need to be an attractive place to list.”

He said the industry, the New Zealand Stock Exchange and the Government were collectively considering regulatory concessions for smaller-sized companies, such as relaxed continuous disclosure rules.

“I do think we need changes and I do think we are going to see change.”

Watch Malcolm Jackson discuss how to save our shrinking stock market in today’s episode of Markets with Madison above.

Get investment insights from executives and experts on Markets with Madison every Monday and Friday here on the NZ Herald, on YouTube and wherever you get your podcasts.

Sponsored by CMC Markets.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.

Madison Reidy is host and executive producer of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.