Tracking the NZX

On cue, the NZX reported its results moments after I published this post! It reported a 34 per cent increase in annual net profit after tax to $8.7 million.

Key contributions came from the data and listings areas, with a particularly strong showing by secondary capital raisings. The NZX market information business generated 72 per cent more revenue to $10.54m with strong demand for NZX data. Growth also came from its acquired news and information businesses - Company Research Centre (formerly IRG Data), NZX Agrifax, FundSource and NZX NewsRoom.

Every day, I check out the NZX website.

The NZX's three securities markets form a diverse offering for companies wishing to raise capital and investors looking for secure and liquid & investment products. These markets feature many of the nation's most established and proven companies and offer new opportunites for emerging new companies and listed issuers.

I pay particular attention to the NZAX, one of the three securities markets the NZX offers, which is tailor-made for fast-growing, developing companies. In 2007, the NZX set up NZX SciTec. This is sector based listing of companies in the technology space. It is interesting for me to see how they are performing in this financial market.

One issue I have not got my head around yet is how the market sets the prices? A single trade of say NZ$5,000 can move a share price several ticks, adding or knocking off, an overall company valuation of many multiples of that. Perhaps it is the relatively small number of trades that take place and the value of them. I do not see that massive price fluctuation when I look at similar trades on markets such as AIM or the NASDAQ.

This volatility does not make the NZX a particularly attractive proposition and I do not know if it is just a temporary thing. When I left for the UK in December, the capitalisation of the NZX market was just over $NZ72 billion. Today, it is just NZ$61.5 billion. Globally, all markets have fallen in this period, so the NZX is not alone in this. However it's relative size, or lack of, compared to competing global exchanges must now be troubling the NZX, its constituent companies and the market makers who work in it.