Wellington. NZX has signed a deal with the American stock exchange, Nasdaq, to explore opportunities in dual listings and depository receipts, as the New Zealand bourse looks to attract share sales by providing greater access to overseas markets.
The deal comes at a time of weak liquidity in the Pacific nation's exchange. The NZX attracted seven new listings in 2016, but that dropped to just one each in 2017 and so far in 2018, frustrating brokers and fund managers.
It also lost its star player Xero in November. The global accounting software developer abandoned the NZX to focus on its existing Australian listing, although it is still headquartered in Wellington.
"Certainly we're thinking hard about our customers ... we're thinking hard about how we create more value for them and clearly we want to attract more activity to our market," NZX chief executive Mark Petersen told Reuters in a phone interview.
The option for a second listing on Nasdaq would complement similar options NZX is exploring with exchanges in Singapore and Hong Kong, he added.
The Nasdaq option will appeal particularly to New Zealand tech and innovation companies interested in boosting their profile in the US market, Peterson said.
"We've got some real innovators in New Zealand. They might be in the tech sector – it could be biotech, it could be fintech, it could med tech. There's a range that it could work for," the chief executive told Reuters on Wednesday.
New Zealand has a fast-growing tech scene and information technology is the country's third-largest export sector, but industry members and analysts often complain of a dearth of local capital.
"For most of us there isn't enough investment opportunities in New Zealand so we're forced to go offshore," said Brian Gaynor, head of Auckland-based fund Milford Asset Management.
He was, however, cautiously optimistic about NZX's memorandum of understanding with Nasdaq.
"It doesn't look great, but at least they're trying and moving in the right direction whereas previously there was no interest in these types of things."
NZX has approved Nasdaq as a recognized stock exchange for equity listings, which enables issuers listed on the Nasdaq's global select market to apply for a secondary NZX listing.
Under this arrangement, issuers will need to comply with the primary rules of their home exchange, but are exempt from almost all NZX listing rules.
NZX said it would host Nasdaq executives in New Zealand to advance discussions.