ASX ambition is to be region’s Nasdaq
The closer Anzac mates work together, the better, writes Max Cunningham
One of the highlights of my 2017 was travelling to Israel in October for the centenary celebration of the Anzacs’ battle against the Turks at Beersheba in WWI.
Their victory helped liberate the region from Ottoman rule and lay the foundation for modern-day Israel.
Among the many points of pride were admiring the New Zealand and Australian flags flying side by side on every major street, and being moved by the Kiwi Army Corps performing the haka in front of an awe-struck crowd of dignitaries including Israeli Prime Minister Benjamin Netanyahu.
The events made me reflect on the enduring closeness and importance of the transtasman partnership; a partnership that in capital market terms should have more in common with the spirit of Anzacs than the Bledisloe Cup rugby rivalry.
In the past four years, the number of New Zealand companies to list on ASX has increased from 16 to 55. These have taken many forms, including dual-listing IPOs, secondary listings and sole listings.
We have seen similar interest from Israeli small-cap companies in the last two years, with 17 now listed on ASX with a combined market capitalisation of A$2 billion ($2.21b) — hence my visit to Israel in October.
So what’s the common link? Due to Australia’s compulsory superannuation scheme now valued at A$2 trillion, a single listings board with global standard corporate governance and the highest level of foreign investors in southeast Asia, ASX has become the natural home for companies in this region seeking capital to grow their businesses.
These listings have provided welcome diversity for Australian and New Zealand investors as well, with the Kiwi and Israeli sectors outperforming the local benchmark indices on the ASX in the past year.
Capital markets are similar to customer markets — business should always seek out the largest pool. New Zealanders have been doing this for years, whether retail brands like Canterbury, A2 Milk or Xero, or services like healthcare, building materials or tourism.
Attracting more capital is no different, and can stimulate IP and innovation, new jobs and revenues for the state treasury.
It is desirable for New Zealandbased companies (and Australian) to lower their cost of capital by increasing liquidity and attracting global investment, otherwise they face the prospect of takeover by overseas corporations or private equity, and the risk that jobs and taxes will be exported as well.
As the largest capital market in the region, ASX can provide the quantum of capital and the access to overseas investors to enable Kiwi companies to maintain their competitiveness.
The past 30 years have seen the greatest wave of macro-economic reform in New Zealand and Australia.
Free trade has been the cornerstone of this and the net result has been greater prosperity for both countries. Nothing underpins the foundation of free trade greater than the movement of capital. Innovation is the key to this story.
It’s a quality New Zealanders have demonstrated in abundance in many facets of life. When it comes to listed companies, we’ve been told for years that Nasdaq is the global home of tech. ASX decided to challenge this and expand our traditional sector associations beyond resources and financials.
Having reached a critical mass of capital and with an informed and interested analyst and investor community, we made the conscious effort to target tech both in the region and around the world.
In recent years we have seen the number of technology listings on ASX climb from 70 to 212, and there’s a solid pipeline in place that will see the number grow comfortably in 2018.
Liquidity begets liquidity. Our goal is for ASX to be seen as the natural home for southern hemisphere tech IPOs — the region’s Nasdaq — and believe we are well placed to help companies with market caps of A$100m to A$1b reach the right-sized pool of investors.
Few nations are as important to each other as are Australia and New Zealand. The closer we work together, open our markets, reduce capital costs and provide greater opportunities for investors, the stronger and more prosperous both will be.