Forum Archive Index - July 2000

["Nigel Bree" <nbree@kcbbs.gen.nz>]

Steve Moxham wrote:
> e.. Our geographical location makes it difficult to attract large
> wealth creating businesses to New Zealand.

Amend this to _physical_ wealth creating business.

> f.. The Government has too tight a reign on monetary policy and a
> trigger happy approach to adjusting interest rates to control inflation.

In case you've been asleep for a while and missed it, this is not under the
control of the elected government thanks to National placing the reigns of
monetary policy outside political control.

Rather like National painting everyone into a corner by paying large
salaries
to incompetent officials (Rankin being only the most visibly offensive and
braindead) to their "rebranded" departments together with contracts that
make
them impossible to dismiss.

Labour, of course, could try and change the Reserve Bank Act, but I suggest
that the incoherent views of the business community and even more brainless
and factless commentary from Fran O'Sullivan would turn to screams for blood
should the idea be mooted.

> g.. Not enough Government assistance for new businesses and entrepreneurs.

Isn't that what Anderton's schemes are about?

> h.. Not enough investor friendly policies to attract investment e.g. Lack
> of mkt depth and concerns about insider trading.

The NZSE seem blithely unconcerned. But then, the Serious Fraud Office has
never actually done much about any other form of white-collar crime in this
country either.

> i.. A lack of education about investing on the stockmarket.

Lack of education about investing is definitely a problem. But then, with
listed companies having proven to be destroying shareholder value at an
incredible rate, better education might suggest that steering away from
NZ's business community is a better bet.

> j.. Low public participation compared to the U.S.

See above. Given company performance, most people are wise to give the NZSE
a wide berth. Lack of publicly available information on NZ businesses
doesn't help either.

> k.. Elephant like memories of the 1987 crash and the perception of the
> stockmarket as a gamblers den.

Indeed. That perception is wrong, Sky City offers much better odds of coming
out ahead than the NZSE and is, I am told, actual fun.

> Naive culture that 'money is evil'.

Indeed. Like the naive view that business is solely about return on
investment. Money is _amoral_. Different thing entirely.

Potential Solutions:
> a.. NCM - The NZSE has developed the New Capital Market which I believe
> is a good start towards addressing the issue of bringing new companies
onto
> the market.

*shrug* New companies, perhaps, but well-run, profit-generating companies or
lots of pump'n'dump penny dreadfuls?

> b.. Begin an active drive approaching companies who have never considered
> a listing on the market.

If they are growing organically, why seek additional investment funds? Too-
rapid growth is _dangerous_ to companies moving from a fluid entrepreneurial
phase to a size that needs middle tiers of management. Company cultures at
such a point are rapidly destroyed, and innovation with it.

> d.. Encourage companies to seek a public listing instead of private
> funding/venture capitalist/ bank.

Why? VC or private funding for technology start-ups, for instance, often
comes with valuable management and marketing expertise attached, and the
VC/private investor is aligned with the interests of the start-up in very
useful ways.

> e.. Raise the profile of the NZSE in the public psyche as an alternative
> to putting your money in the bank.

Not a bad suggestion. Banks are vulnerable, particularly now that on-line
banking demonstrates to all consumers just how badly banks are treating
retail customers in terms of rates offered.

> k.. More grants for research and development.

Grants are not the only form of incentive, nor even the best. Changes to
tax law are more effective incentives, and increase NZ's attractiveness
relative to other locations.

Note, by the way, that in this Week's _New Scientist_ the "Antipodes"
column contains a vigorous call for the Australian Government to add
further incentives to private R&D nothing that their level of R&D as a
percentage of GDP has slipped badly. What does that make NZ?



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