Commerce minister proposes capital market shake-up
by Gyles Beckford · RNZ- Commerce minister proposes capital market shake-up
- Plans to remove barriers for Kiwisaver funds to invest in private assets
- Proposed changes to make it easier and cheaper to list on the NZ Stock Exchange
- Ease rules on financial disclosures, risk assessment, liability
The government wants to give local capital markets a shot in the arm, by broadening the range of potential investments for Kiwisaver funds and making it easier to list on the local stock exchange.
Commerce Minister Andrew Bayly said the changes would make it easier for the funds to invest in private assets and longer term infrastructure projects.
Much of the $120 billion in Kiwisaver was invested in overseas assets and sharemarkets while local businesses were being ignored, he said.
"Part of the problem is our relatively shallow pools of capital, meaning businesses often struggle to raise money to invest in labour saving technology and equipment.
"Leveraging the money held in Kiwisaver to invest in unlisted assets, particularly domestic ones - such as transport projects, renewable energy generation or large-scale housing developments - would be a win-win."
Among the proposals would be to clear barriers to local investment by changing liquidity management settings, the valuing of private assets, calculation of management fees, and setting a longer investor withdrawal period for certain types of funds .
"For Kiwi investors, exposure to different asset classes means risk diversification and potentially higher returns," Bayly said.
The clearing investment barriers had been raised by the Kiwisaver sector, but there would be no compulsion, he said.
Easier to list on the NZX
Bayly said he also wanted to make it easier and cheaper to list on the NZ Stock Exchange.
"The fact that only a handful of companies have chosen to list on the NZX in recent years speaks to the unattractiveness of our capital markets."
Among the proposed changes were making the extent of financial information to be offered in a public share float more flexible to match Australian requirements, and relaxing the scope of the mandatory climate reporting for large companies.
"A particular concern is the cost associated with providing forward-looking financial information - known as prospective financial information - as part of an Initial Public Offering and the burden of complying with the climate-related disclosures regime."
Some firms were spending millions to comply with the current rules, which was of more benefit to lawyers than investors, Bayly said.
The NZX has had only a few small technology companies list in recent years, but has lost at least a dozen companies through takeovers, moves to the Australian exchange, or to the small unofficial Unlisted exchange because of the high cost of being on the NZX.
It has also proposed to look at liability rules for disclosing information, product disclosure requirements, and auditors' duties.
Details are on the Ministry of Business, Innovation and Employment's website, with consultations to close on 14 February 2025.
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