“It’s an important macro-economic question to ask where money might come from.”
There has been quite a bit of interest amongst commentators about IPOs in the New Zealand market. NZX CEO Mark Weldon has been asked his views, which appeared in the NZ Herald on 24 July.
From the story:
Takeovers could wipe NZ Farming Systems Uruguay and Affco from the NZX but Weldon said he was more interested in the future than any losses.
“It’s the birth rate we need to fix rather than the death rate,” he said, predicting a return to vogue of capital notes, debt instruments favoured in the past by big businesses like Fletcher Building.
“Last year, we had $6.6 billion of new capital raised on the market, of which $3.3 billion was bonds, and a lot of that was to restructure balance sheets,” he said.
This year was slower. New Zealand’s thin market and lack of listings was nothing unusual internationally, he said, and the lack of capital was a big constraint on business overseas and here.
“It’s been very shallow in terms of listings. Companies are stockpiling cash rather than undertaking construction or new investment. It’s an important macro-economic question to ask where money might come from. Clearly, it’s good that shonky finance companies have gone but on the other hand, subordinated debt is a good thing if it’s managed well. We might start to see capital notes on NZX again but it will take some time before any mezzanine finance comes back because now everything has to go through Reserve Bank regulations.”
PS. Just a reminder what has been going on the world stock markets in the first half of the year. Market capitalisation in the Americas dropped 7.8% in first half of this year, 9.3% in Asia-Pacific and 18.4% in Europe/Middle East/Africa. This means an average drop of 11.5% in USA dollar terms.
Link to the Herald article:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10660830
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Posted by Merja on July 26th, 2010 :: Filed under General
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