The NZX and the Financial Markets Authority (FMA) have launched a review that will look at ways of injecting life back into a share market that has struggled to attract new listings in recent years.

The review, dubbed "Capital Markets 2029" is designed to deliver a 10-year vision and growth agenda for the sector, the organisations said in a joint statement.

It will consider the current framework and broader "ecosystem" of New Zealand's capital markets and will outline recommendations for the creation of wider, more active participation and increased diversity of product, they said.

Review chairman Martin Stearne said it was time the industry did a "stock take" on the current state of play.


New Zealand's capital markets have performed well in a number of areas - such as KiwiSaver and debt issuance - however equity listings have remained subdued, and the listed equity market is under-developed relative to its global peers.

S&P/NZX 50 companies generate more than $24.6 billion in gross domestic product for the local economy, employing just under 100,000 people.

The review will aim to create a "growth agenda" to build on the contribution already being made by these companies.

"NZX has delivered some fundamental changes to the market over the past 15 months, such as increasing on-market liquidity and simplifying the markets structure and rule set – but we only play one part in New Zealand's capital markets ecosystem," NZX chief executive Mark Paterson said.

"It is now important we bring the industry together to focus on accelerating the growth of our capital market," he said.

The FMA's chief executive Rob Everett said the review would respond to concerns expressed about the overall depth and breadth of New Zealand's capital markets.

"From early-stage capital raising and investment opportunities all the way up to main board listings and institutional investor appetite, we felt the time is right to plan for the future," he said.

Stearne, is a corporate consultant and a member of the NZX listing sub-committee and the investment committee of Impact Enterprise Fund.


He was an investment banker with FNZC, and its predecessors, for 20 years, where his final role was managing director, equity capital markets.

Stearne will be supported by EY, who have been engaged to help produce a report.
The NZX and FMA will jointly fund the initial costs, however depending on the costs for delivery funding may be sought from industry.

The findings of the review will be published in third quarter of 2019.

The NZX has taken flak for the relative lack of listings over the last few years, but Stearne said the exchange itself was not to blame.

"The exchange won't make listable companies appear so it is certainly not the exchange's fault," he said.

"If you look globally there are a number of larger companies who are staying private for the long term," he said.


"I'm not sure if we are seeing the same trend here because we are a much smaller economy, without the same number of large, private companies.

"But even at the smaller end of town, listings globally are not where they were seven or eight years ago," he said.

Another factor at play was the emergence of private equity companies in New Zealand and Australia, with large funds to invest, taking positions in companies that would have otherwise been listed or in companies that are indeed already listed and have been taken over.

There was also a cyclical dynamic involved, especially in these times of very low interest rates, but he aid the review was all about taking a "deeper dive" to see what can be done.

"It's timely that the industry does a bit of a stock take and I think it's good that it is industry-led," he said.

Despite the prospects for a number of new listings occurring, 2018 proved to be another quiet year for initial public offerings.


The only listing was QEX listing on the exchange's NXT market in February. QEX migrated to the main board last September.

"The subdued level in listing activity is mostly driven by private equity funds continuing to aggressively absorb potential candidates, combined with equity capital being a relatively costly source of funding relative to debt, given historic low interest rates in New Zealand," JB Were said in a market review this month.