NZSE releases more information on proposed index changes

By NZPA

Monday 18th November 2002

The New Zealand Stock Exchange released a revised proposal today to develop a new free-float benchmark index.

The stock exchange wants to abandon its NZSE-40 and NZSE-30 capital indices, replacing them with a free-float-based and expanded NZSE-50 index.

About 25 submissions were sent to the stock exchange commenting on the proposed index reforms, prompting the NZSE to release the revised proposal today.

"We received a lot of comment on the proposed changes from the market -- 95 percent of which were positive," NZSE market and relationships manager Geoff Brown said in a statement.

"Importantly, the submissions received signal that there is support for the headline changes we announced -- to move to a free float index, and to gross values," Mr Brown said.

Indices in gross rather than capital terms include dividends, which in a country where companies regularly make healthy returns to shareholders could make them more attractive overseas.

Stocks would be ranked according to how available their shares were to the public.

Under the revisions:

* The NZSE-50 would still exclude all holdings above 20 percent, but also exclude strategic holdings between 10 percent and 20 percent;

* The NZSE-50 $1 billion free float up-weighting rule would be amended so that changes to a company only occurred on the basis of a six month average of its market capitalisation; and

* The NZSE-10 would become a free float-adjusted market capitalisation weighted index, to more closely track the NZSE50.

"We believe the recommendations in the revised proposal will ensure that all the NZSE indices are both more measureable, and more investible, for the broad range of investors in New Zealand," Mr Brown said.

The new proposal is open for final comment until the end of November, with the new indices expected to be calculated from January.

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