NZX upbeat over capital raising

Tuesday 5th May 2009

NZX, which operates New Zealand’s bourse, is upbeat about the amount of capital raised this year, which has boosted revenue in the face of weak trading and a dwindling market.

More than $1.7 billion of total capital was raised in April, as companies including Sky City Entertainment, Freightways and Nuplex Industries tapped investors to bolster their balance sheets.

The total number of trades on the exchange fell 10% to 44,506 from the same month last year, while the total value traded slumped 21% to $2 billion. Daily average trades fell 5% to 2,225, the highest level since October.

“We expect to see strong secondary equity raising continue through the year,” said markets development manager Geoff Brown, in a statement.

“The growth potential of the debt market is also recognised, and further developments to enable a broader range of organisations, including local authorities and SOEs, to access the debt market to raise capital are underway.”

The record capital raised for a year is $5.5 billion in 2007, and the NZX believes it is on-track to break that this year, with $3.1 billion raised year-to-date. The market capitalisation of all the exchange’s equity markets sank 24% to $47.4 billion from the same month last year. NZX posted a 40% increase in first quarter profit to $3 million last month, as it sold assets while cutting labour costs.

The NZX has diversified its role from basic stock exchange services, recently acquiring farming publisher Country-Wide. The move sparked a complaint to the Commerce Commission by Main Report publisher Max Bowden, who claimed it breached the Commerce and Fair Trading Acts.

Businesswire.co.nz

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