Last year there was just one initial public offering on the New Zealand Stock Exchange's main board versus eight de-listings — despite the local sharemarket having otherwise enjoyed a record-breaking 12 months.
Those stark figures prompted some serious soul searching on the part of those running the NZX, with November's shock announcement that local hero Xero was abandoning the local exchange to trade exclusively on its Australian counterpart lending a sense of real urgency to their ruminations.
"All of my career I've been a customer-orientated person," says NZX chief executive Mark Peterson. "When you effectively have a product that somebody doesn't want to be a part of any longer, you've really got to start to reflect on that product."
Xero's decision, he says, "really crystallised and gave a focus to what we think we need to do".
What that entails is breaking away from the "isolated regional stock exchange model" the NZX has traditionally operated under in favour of embracing a new approach "that's more about reaching out and working together" with a network of exchanges around the globe — all while maintaining its sovereignty and national identity.
This seismic shift in strategy is predicated on the assumption the NZX's current one does not provide high-value opportunities for long-term shareholder wealth creation, whereas an alliance approach would be a low-cost, efficient and effective way to create the kind of scale and scope it wouldn't be possible to achieve by continuing to go it alone (Air New Zealand's Star Alliance model is name-checked as a proof of concept).
Peterson is keen to stress "it's very, very early days" in this evolution of the NZ exchange, although it has already signed Memorandums of Understanding with the Hong Kong and Singapore stock exchanges and is working on initiatives with each.
An NZX-run conference in Singapore in November, for example, will focus on dairy derivatives and equity and give SGX clients the opportunity to be exposed to NZ companies.
"That's an example of giving life to the idea of the MOU — it's a small but important step forward," Peterson says.
At this stage there are a number of options regarding how this new approach will be advanced, with the alliances intended to feature several layers.
For starters, there's joint marketing, which would involve the participating exchanges promoting their respective strengths "for the benefit of the customers we're trying to serve but also the organisations that are working together," Peterson says.
Then there's the recognition and alignment of regulatory regimes, so that "if you meet the requirements of one then — in theory anyway — you're starting to meet the requirements of the others and the investment you make in becoming public can almost become a passport to some of these other markets".
Ultimately, if all goes well with strengthening the relationships between these partner exchanges, Peterson says there's the alluring possibility of a technical connection for trading and clearing.
"First and foremost," he says, "we have the value of our customer at heart and are thinking about the product that's going to work for them.
"It's about getting the best out of the investment they make in going public, smoothing the way for them to connect to the rest of the world.
"And at the same time, we're aiming to have a stronger presence on the international stage as an exchange and really make the world aware of all of the things the public markets have in New Zealand."
Across the Ditch
In the past five years, the number of New Zealand companies listed on the ASX has grown from 16 to 57.
Xero's high-profile decision to shift its listing to the ASX created a good deal of controversy. But ASX metrics suggest this trend is now bedded in and it will take some skilful strategising from the NZX to bolster its own operations.
The NZ companies range across sectors from technology, to telecoms, healthcare, consumer goods, utilities and materials, and were seen as adding to the breadth of stocks listed on the Australian exchange.
ASX executives say the number of NZ companies in the ASX200 has grown from two to eight with with Xero's promotion to the index.
By February 2018, the market capitalisation of Kiwi companies had grown from A$27 billion to A$90b — a growth in market cap of over 230 per cent.
The ASX listed NZ cohort out-performed the broader market last year, with an average price performance of 15 per cent versus 7 per cent for the ASX200.
Economic Development Minister David Parker is not fazed. To him it is a rational step for New Zealand companies to seek an ASX listing, not just to raise capital, but also to gain knowledge from the specialist skills among the wider range of investors and analysts in Australia.
He says he is grateful for the ASX support for transtasman business.
The surge in transtasman listings dates back to a mutual recognition agreement between Australia and New Zealand to facilitate security offerings.
Cross-border investment was given a further boost in 2015, when the ASX introduced the foreign exempt listing which significantly reduced compliance costs.