M and A takes toll on sharemarket

THIS year is already shaping up to be a big one for New Zealand mergers and acquisitions, and $3.5 billion in value is set to be wiped off the local sharemarket, JBWere said.

The investment and brokerage firm said the ‘‘disturbing’’ trend of merger and acquisition activity continued throughout 2018, which was the busiest since 2012.

‘‘We estimate about $1.5 billion in value was wiped from the NZX following successful takeovers,’’ JBWere said in its annual equity ownership survey.

‘‘Looking ahead, 2019 looks set to dwarf this with about $3.5 billion worth of transactions still subject to takeover approval,’’ it said.

This year, the takeover of Trade Me by private equity company Apax for $2.5 billion, subject to shareholder and court approvals, looks set to top the M&A list.

JBWere said foreign ownership of New Zealandlisted stocks rose by 1% to 39% last year — the highest point since 2007.

Foreign ownership of New Zealand equities has fluctuated from 44% in 2005 to as low as 22% over 2014 and 2015, JBWere data shows.

The local market remained an attractive destination for offshore investors over the year.

The aggregated offshore ownership level included Australian investors owning about 16% of the total float of the S&P/ NZX All Index.

The survey consisted of 64 companies, accounting for 95.6% of the S&P/NZX All Index in terms of total market capitalisation.

Of the 64 companies surveyed, 13 companies had offshore ownership decreases of greater than 1%, 34 had increases above 1% and 14 were essentially unchanged.

Positive offshore investor sentiment towards the New Zealand market was reflected in offshore investors increasing their holdings across the board of constituents within the S&P/ NZX All Index.

‘‘The general theme observed from the results of this year’s survey saw offshore investors upweight their positions in large cap names considerably and more aggressively in small cap names in the S&P/NZX All Index,’’ JBWere said.

‘‘This is in sharp contrast to last year’s result which saw the level of offshore ownership increase due to the remarkable foreign buying in both a2 Milk and Xero,’’ it said.

There were material differences to this year’s constituents within the survey after several stocks exited the NZX, including Xero, which migrated to the ASX.

This had a material effect on the overall offshore ownership level, as Xero was majority owned by offshore investors. — NZME