Stock Takes: Why is there such a dearth of companies listing on the NZX?

We haven’t had a single listing on the New Zealand Stock Exchange this year so far. You have to cast your view back to December 2022 to the listings of WasteCo and Black Pearl to find any newcomers to the NZX.

Speaking to the Herald’s Stock Takes podcast, independent consultant and former head of the insight at the NZX Julia Jones says that this trend isn’t limited to New Zealand.

“It’s not necessarily anything to do directly with the NZX,” she says.

“I looked at a group of exchanges around the globe, and, to be honest, even the New York Stock Exchange hasn’t had an IPO this year either … Technically, we’re in limbo globally at the moment. We’ve got a scenario where risk is up and resilience is down.”

Jones attributes this to a number of global economic factors all conspiring.

“We’ve got geopolitical uncertainty, we’ve got global protectionism and we’ve got financial stability wobbles. If you’re a business, there’s a really good chance that you’re relocating the capital to meet other needs and you might just be in more of a survival mode rather than a progressive, thriving mode.”

In recent years, we’ve also seen some of our biggest or most promising companies head abroad to other exchanges. Xero, Rocket Lab and Allbirds are just a few of the most prominent examples on that list.

Jones says you really have to look at the motivations of the business to understand why they have decided to head abroad.

“It just comes down to what shareholders they’re trying to look for. What arena are they wanting to be profiled in? Each company has its own desires and goals, and different exchanges meet different goals. That doesn’t mean the NZX is bad. It just means that the NZX offers something different to what those other exchanges offer.”

She also adds that just because company owners list their business on an exchange abroad, it doesn’t mean they’re not committed to the New Zealand market. Rocket Lab has set up a venture capital fund in New Zealand, Allbirds still relies on Kiwi wool and Xero has long maintained a large presence in the local market.

“They actually put a lot of investment back into New Zealand in different ways,” says Jones.

But what about businesses that are thinking about listing on the NZX? Should they do it? How do they go about it? And how far in advance should they plan to make sure everything goes according to plan?

Listen to the full episode of the Stock Takes podcast to hear the full discussion on this issue.

Stock Takes is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every Wednesday and are brought to you with support from Fisher Funds.