NZX boss says exchange must keep trading
The head of the NZX says it is vital the New Zealand sharemarket keeps functioning through the Covid-19 crisis to help businesses raise life-saving funds.
Chief executive Mark Peterson says the NZX will keep operating because it was ‘‘an essential service’’.
‘‘It is really important that we actually get really practical during these periods. If you have got good companies that are going to struggle for a period, then we need to help them through that period. If we can do our bit by giving them a little flexibility, then we will.’’
Peterson said he did not want the NZX to emulate the sharemarket in the Philippines, which last month suspended all trading and went into freefall when it reopened. ‘‘You end up compressing all of that volatility ... which can actually have worse outcomes. So the best thing you can do is keep the market operating, keep it fair in the sense that everybody is trading with the same information, and then the market can generate a price.’’
It was important to have a price to let firms raise capital. ‘‘The liquidity and the trading activity becomes a very, very important component to price the company to assist in a capital raising.’’
Last week, the NZX also made temporary changes to make it easier for companies to bring in new investment.
Over the past fortnight, the New Zealand sharemarket has been handling huge volumes of shares and Peterson said it was reassuring to see the exchange had been operating smoothly.
The sharemarket hit a record of 74,000 trades on Friday, March 13 handled 60,000-plus trades daily all last week.
Brokers are now largely working from home and many of NZX’s 230 staff are also, while core staff have been split into two teams and will alternate between working from home or in the workplace, to ensure better physical distancing.
The NZX will not only keep the equity and bond markets going but also its dairy-led derivatives market and the energy market’s trading platform.
The New Zealand sharemarket closed down 7.6 per cent after investors absorbed the implications of the lockdown. The NZX-50 was down almost 10 per cent at 2pm, after the Government’s announcement. But it recovered some of those losses later in the afternoon. Australia’s sharemarket was
5.1 per cent down shortly after the NZX closed at 5pm NZ time. Earlier, the Reserve Bank announced it would start buying $30 billion in government bonds, following other central banks. The New Zealand dollar was trading around US56.5c at 5pm, hugging a near-10 year low. Most stocks were in the red.