Fianncial Markets Authority CEO Rob Everett. Photo / Supplied
Fianncial Markets Authority CEO Rob Everett. Photo / Supplied
Opinion by
FMA expects shake-out in packed market.
How many equity crowdfunding platforms is too many equity crowdfunding platforms?
This newfangled area of capital raising, which allows shares in businesses to be offered to the public online, has become an incredibly busy space.
Seven equity crowdfunding operators are now licensed by the Financial Markets Authority (FMA). The first licences, gained by Snowball Effect and PledgeMe, were only issued in July last year.
More than $12 million was raised through equity crowdfunding in New Zealand in the year to June 30.
But Stock Takes wonders whether the local market is big enough to support so many platforms.
Interestingly, FMA chief executive Rob Everett is thinking the same thing.
"I don't think New Zealand's big enough for more than a couple, at most, of meaningful crowdfunding entities," he said last week after the regulator released its annual report.
"I think there will be a shake-out over time into the ones that are fulfilling the purpose of the [Financial Markets Conduct] Act in terms of providing capital raising for small companies and there will be others that are just a bit more gimmicky."
Everett added that the FMA didn't get to decide how many crowdfunding platforms operated in New Zealand.
"Frankly if people meet the licence criteria we have to license them - we don't get to take a view as to whether there are too many."
Back in April, Snowball Effect's Josh Daniell also raised the spectre of a downsizing in the number of platforms.
"We think that competition will heat up this year, which will be good for companies and investors," Daniell said. "But we don't think the market is large enough to sustain that many players. We expect consolidation or a shake-out."
Everett also said a recent caution given to fund managers over talking to journalists wasn't designed to limit media comment.
In an information sheet on "misconduct risks" released in August, the regulator warned that speaking to reporters was a potential source of conflicts of interest.
"The commentary itself, as well as trading activity afterwards, should be monitored and assessed within the risk and compliance framework."
Fund managers are some the most outspoken market participants and it would be a real shame if increased regulatory attention caused some to decide that speaking to reporters is more trouble than it's worth.
"We just thought it was one of those areas of conflicts of interest where people just needed to be reminded," Everett said.
"We absolutely don't want to chill the ability of anyone in the market to go out and discuss market issues. But if you hold a big position in a stock - or you're about to hold a big position in a stock - common sense says you just ought to be careful what you say to whom and be sure your internal processes record everything that's happening."
Comments and queries about personal experiences of Air New Zealand were discouraged during question time at the airline's annual meeting on Wednesday.
"Questions should be related to the company rather than individual experiences as travellers," chairman Tony Carter said as he kicked the Q&A session off.
"If you have those questions there are plenty of management people here who can help you individually." Such questions have often come up at past meetings, including complicated queries about Airpoints issues.
But despite the discouragement, a few personal experiences still came up this week.
As Stock Takes left the Viaduct Events Centre, one shareholder, bless him, was singing the praises of his local Air New Zealand Holidays store in Milford.
His comment was prompted by the airline's proposal to exit the travel outlets.
The airline is reportedly looking to sell 10 of its 22 Holidays stores, while the remaining 12 could be closed by the end of next month, possibly at the cost of 41 jobs.
Air New Zealand shares closed up 5.5c yesterday at $2.635.
Chinese Premier not so influential
Premier Li Keqiang (left) didn't make Bloomberg's Markets 50 Most Influential list, but President Xi Jinping came in at number two. Photo / AP
Chinese Premier Li Keqiang copped a bit of a snub in the Bloomberg Markets 50 Most Influential list, released this week.
China's President, Xi Jinping, made number two, right behind US Federal Reserve chair Janet Yellen. But Li didn't make the list at all. There has been speculation that the Premier, who is directly responsible for managing China's economy, could become the fall guy for the perceived mismanagement of the turmoil that has enveloped the country's markets.
"Li's position has become more precarious as a result of the crisis," said Willy Lam, an expert on Chinese politics. "If the situation worsens and if there comes a point where [Xi] really needs a scapegoat, then Li fits the bill."
