UBS is buying Credit Suisse in a US$2b deal after a string of US bank failures and in an extended interview the NZ Stock Exchange CEO discusses a lack of IPOs and what sectors the exchange wants more of.
Video / NZ Herald
ANALYSIS:
The New Zealand Exchange (NZX) has raised eyebrows for straying beyond its mandate, similar perhaps to criticisms hurled at the Reserve Bank of New Zealand.
If the central bank’s role is price stability, then the exchange’s is to operate and regulate a market where companies want to list andinvestors want to trade.
With limited listings in recent years and a number of well-liked companies leaving the exchange, the NZX is getting increasingly involved in investment management, having grown its passive funds management firm Smartshares to $10 billion in funds under management.
In an extended interview on Markets with Madison, NZX chief executive Mark Peterson said it “provides the core market on one hand”.
From the outside, the NZX’s straying seems by some to be a money-making move to please its shareholders - the game plan being to grow a funds management division by capitalising off KiwiSaver and the popularisation of exchange traded funds (ETFs) and eventually sell the client book back to the industry for a sweet cheque.
But from the inside, it’s said to be a diversification strategy, to strengthen the business of the exchange.
“[The] NZX has been around for over 150 years. We’ve got to make sure that it’s around for the next 150 years,” Peterson said.
The New Zealand Stock Exchange has just acquired an active asset management firm in a deal worth up to $50 million. The move is confusing competitors. Photo / Supplied
Peterson was adamant the exchange was not eating the lunch of the major fund managers, namely Craigs, Jarden and Forsyth Barr, despite just buying a firm that would directly compete with them.
“We’ll see how we go over time. There are some discussions to have about just how we evolve those products and what the market wants,” he said.
“We don’t see ourselves competing directly with those other managers, ultimately.”
Ahead of the interview, I called around the capital markets industry. Fund managers were not only frustrated by the NZX’s foray, they were confused.
In an effort to explain its thinking, Peterson said most major stock exchanges had numerous strings to their bows, such as technology, although he did acknowledge the NZX’s strings were tied to the industry.
“We just happen to have gone down some roads which are closer to financial markets and financial services.”
Broadly, the stock exchange saw itself as an “infrastructure provider”, he said.
