The flow offshore needed to be balanced with the requirement for New Zealand companies to have capital, he says. \u201cIdeally, in a perfect world, we would have an option of investing in a company overseas that had a global footprint, or a company in New Zealand that had a global footprint.\u201d<\/p>\n
For the health of the economy, investors should pick the New Zealand company every time.<\/p>\n
This would allow more Kiwi companies to grow on the world stage \u2013 what Mander calls \u201cmini multinationals\u201d.<\/p>\n
\u201cWe\u2019re too small as a country to have the BPs and Microsofts of this world, but we do have a few really good ones like Fisher & Paykel Healthcare and Infratil that do compete on a global stage for their opportunities and for their capital.\u201d<\/p>\n
Mander, who has headed the New Zealand Shareholders\u2019 Association for nearly six years, is puzzled at why more KiwiSaver members don\u2019t realise they are sharemarket investors.<\/p>\n
\u201cThe majority still don\u2019t realise that they are investors and that\u2019s something that we\u2019re really conscious of.\u201d<\/p>\n
There is continued discussion about the KiwiSaver scheme\u2019s policy settings but there is still not enough investor awareness of where fund managers were directing investments, despite information being available.<\/p>\n
\u201cI still think there\u2019s more work to be done. Investors should be interested – at least at a passing level – in what their money is doing and where it\u2019s going.\u201d<\/p>\n
While a lot of money was going overseas, he says, the investment climate in this country was helped by settings and a regulatory environment here that measured up well compared to some other jurisdictions.<\/p>\n
Investor protection<\/p>\n
A recent report into technology failings affecting the ASX exposed wider concerns.<\/p>\n
\u201cThat went way beyond a review into a failed technology project. They talked about governance and about prioritising short-term commercial interests over long-term market integrity.\u201d<\/p>\n
The geopolitical theme should be at the forefront of investors\u2019 minds. It\u2019s not about saying \u2018don\u2019t invest\u2019. It\u2019s about how you can make yourself resilient to those risks and the investment decisions that you\u2019re making?<\/p>\n
\u2013 Oliver Mander<\/p>\n
The landmark independent inquiry by the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia found that the ASX prioritised short-term shareholder returns over investment in technology, resulting in systemic under-investment.<\/p>\n
For New Zealand\u2019s relatively small capital markets, integrity is very important, Mander says<\/p>\n
\u201cWe\u2019re a small country at the bottom of the world, we need to attract the right pools of capital from both domestic investors and international investors. If we don\u2019t have that ability for investors to trust in our markets, we won\u2019t get a skerrick of it.\u201d<\/p>\n
He says striking the right balance between investor protection and making it easy for companies to access capital is a continued challenge. <\/p>\n
\u201cNew Zealand does have a very good investor protection base, not every country does.\u201d<\/p>\n
The association doesn\u2019t \u201cnecessarily love\u201d what it sees in some other countries, however. <\/p>\n
\u201cFor example, in the US, it is really common for the founder of a company to be the CEO and to be the chair. There\u2019s always been different investment expectations in the US and that\u2019s the beauty of a market. Some investors value different things and it\u2019s really hard to argue with the returns that the US market has managed to achieve.\u201d<\/p>\n
While there\u2019s been a dearth of main board listings on the NZX in recent years, there have been some secondary listings and the sharemarket operator has said it sees other positive signs this year.<\/p>\n
Mander says the shortage of homegrown private companies making the step up to public listing was disappointing. Again, regulatory settings need to be finely tuned to encourage this. <\/p>\n
\u201cWe want those companies to grow and develop in a way that means they\u2019re not fettered by regulation or overly burdened by regulation.<\/p>\n
\u201cWe\u2019re also seeing those companies not progressing to public markets, whereas perhaps 20, 30 years ago, they might have.\u201d<\/p>\n
Private companies were funded by private equity, bank debt (mainly from Australia) and a small pool of wealthy wholesale investors.<\/p>\n
That wasn\u2019t healthy for the broader investment community and for the country.<\/p>\n
\u201cLong term, that\u2019s part of the issue for us because you are increasingly getting social and demographic polarisation between different groups of investors and wider society,\u201d Mander says.<\/p>\n
There are other incentives to go public.<\/p>\n
\u201cYou can still raise capital a lot more easily and quickly in a public market than you can in a private world. And that is absolutely critical. We saw the benefit of that through the Covid period, where companies were able to restructure and recapitalise and actually apply growth capital as well.\u201d<\/p>\n
Any further hollowing out of New Zealand\u2019s financial infrastructure would be a signal of failure for the country. \u2018\u2019It\u2019s the financial plumbing that builds the bridge between local pools of capital and investors and companies who are looking to grow on the world stage and improve New Zealand\u2019s productivity.”<\/p>\n
Geopolitical impact<\/p>\n
Mander says New Zealand investors are affected not only by international share market volatility but by geopolitics, which also affects the country\u2019s economy.<\/p>\n
\u201cWhen the world catches a cold, so do we.\u201d<\/p>\n
The full effect of the oil price shock following the outbreak of war in the Middle East was still to be felt and came at the \u201cworst time\u201d for the country, which was just emerging from the economic doldrums.<\/p>\n
\u201cThat hasn\u2019t been great for our domestically focused companies and that\u2019s part of that sort of geopolitical theme.\u201d<\/p>\n
And although economic recovery would come, that could have a sting in the tail for investors with funds overseas. \u201cYou\u2019ve seen some really good international returns because our currency has been weak. Those currency benefits investors have received will unwind and act as a headwind to their returns.\u201d<\/p>\n
Mander says despite uncertainty, investors still have an appetite for opportunities stemming from other big trends such as decarbonisation.<\/p>\n
Capital raises by Contact Energy and Genesis had been popular.<\/p>\n
This had turned what had traditionally been seen as yield-producing companies into more growth opportunities.<\/p>\n
He says New Zealand\u2019s retail pools of capital are strong, as was growth in institutional capital, driven by funds, which Mander points out still enjoy substantial PIE regime tax advantages, compared to DIY investors.<\/p>\n
Corporate behaviour<\/p>\n
The Shareholders\u2019 Association has worked closely with regulators to improve disclosure around executive remuneration.<\/p>\n
Controversy over executive pay hasn\u2019t blown up recently as New Zealand has adopted international practices to make reporting clearer and more transparent. Being upfront about pay avoids \u201cthe noise\u201d that can surround it, says Mander.<\/p>\n
The association\u2019s main focus is fairness.<\/p>\n
\u201cWe\u2019re about to produce a big report on this. The main thing we\u2019re trying to see here is fair remuneration. If you\u2019ve got a company that is not performing well and still paying out really significant long-term incentives, then that does raise some questions around both incentive design and the quantum of those incentives.\u201d<\/p>\n
Mander says there\u2019s a reasonably deep pool of director talent, including in private companies.<\/p>\n
\u201cThere\u2019s no doubt that the expectations and the requirements that you have as a director are increasing, although there are some things that have been removed in changes to the climate-related disclosure regime.\u2019’<\/p>\n
Investors need to know directors are their \u201cagents\u201d in a company.<\/p>\n
\u201cWe want to see them balance their ability to take risks to create growth, with the need for assurance that they\u2019re doing a good job on behalf of investors. Do they all have the ability and the capabilities to do that? Probably not.<\/p>\n
\u201cThere is always a need for ongoing training and development. A director who was really good a few years ago may not be quite so good there in the context of a changed world.\u201d<\/p>\n
The association maps directors\u2019 relationships.<\/p>\n
Directors on some boards don\u2019t have links to others, which he says prevents the sharing of ideas and relationships, while others have a small group of directors who serve on many boards.<\/p>\n
\u201cSomewhere in the middle will lie the truth, to make sure you get that right.\u201d<\/p>\n
Mander says investor attendance at annual shareholder meetings has been falling for decades, which is understandable given many are in funds and are not direct investors and the events can be hard to get to. But he urges any investor who qualifies and is able to, to attend a meeting.<\/p>\n
\u2018\u2019Meetings are still really important, because it\u2019s your one chance a year to get in front of those directors and eyeball them to ask questions.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The flow offshore needed to be balanced with the requirement for New Zealand companies to have capital, he…\n","protected":false},"author":2,"featured_media":474607,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[3110,53654,3937,6150,15293,124,3806,3685,3938,33014,1872,48338,71,61676,1437,3594,330,321,194,99333,225,10110,111,43,139,69,29449,30203,143077,19347,22390,8218,80],"class_list":["post-474606","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-zealand","tag-association","tag-cautions","tag-chief","tag-conflict","tag-continued","tag-could","tag-east","tag-events","tag-executive","tag-exposure","tag-face","tag-fallout","tag-from","tag-geopolitical","tag-global","tag-hit","tag-investments","tag-investors","tag-kiwi","tag-mander","tag-market","tag-middle","tag-new-zealand","tag-news","tag-newzealand","tag-nz","tag-oliver","tag-shareholders","tag-turmoil","tag-unprecedented","tag-volatility","tag-warns","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/474606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=474606"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/474606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/474607"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=474606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=474606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=474606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}