KEY POINTS:
Mark Weldon
NZX chief executive
* * *
NZX chief executive Mark Weldon says the task of fixing problems and establishing a solid base for the market operator is now largely over. The next year and beyond is about building the company up.
How would you describe 2006 for NZX?
"It was a great year. The index was up 20 per cent and the market ended the year at an all time high against nearly all predictions and importantly against what the charts of business confidence in January would have had you believe.
What was NZX's greatest achievement?
Clearly the most potentially transformative and probably unexpected aspect of the year from NZX's perspective has been entering into the agreement with the five global banks in Australia to have a go at the ASX with our ECN (alternate trading platform).
That's the first time any exchange around the world has directly entered another exchange's country physically. It's always been a very clubbish sort of world. Once it is up and running successfully it brings some pretty interesting and valuable options to the New Zealand market.
And greatest disappointment?
The thing that was most disappointing was when three finance companies failed. Many people associated that with the local market even though they had nothing to do with us.
We were deemed accountable and responsible for it and people asking what we were going to do about it.
That was a bit of a surprise and disappointment in the general level of financial education. Really, you think you're further along than you are in that regard.
Obviously the thing that generated the most headlines and was least positive over the year was weekly iterations of whatever was going on with Feltex.
What do you think 2007 will bring for NZX?
In terms of phases the first part of my tenure from 2002 to 2004 we described very consciously as fixing the franchise. The last two years have been about executing the core business and growing the portfolio of businesses, taking our revenue stream away from just financial markets.
The next two or three years are about building on that base. If you build a really strong base you can build three storeys or 30 storeys on it, we would say the ECN is getting it from storey three to storey eight but there are a few more storeys that we can build on top of that.
What will be the major challenges for NZX in 2007?
The set of challenges versus opportunities is moving positively more towards opportunities as opposed to two or three years ago when it was all challenges.
What do you expect from the economy in 2007 and how will that affect NZX?
My view is there are four segments to the economy, government, agriculture, small business and the listed sector. We expect overall growth at around 2 per cent but made up very differently across those groups.
We expect agriculture to be about at the median unless exchange rates fall a lot and I don't expect that.
I would expect the small business sector to continue to get hammered. They've all got mortgages lent against their business and they've got a lot of volatility in supply costs. I expect growth in that sector to be about 0.0 per cent.
Government will deliver a very predictable 3.5 per cent and the listed sector will perform at about the same level or slightly higher than that.
What was the most interesting business story of 2006?
Unequivocally the Rakon story. It was a technology float, there hasn't been too many of those recently. Because it achieved a Nasdaq level price to earnings multiple of 50 compared to the overall market's 15. It's valued as a global growth stock. What makes it very interesting was that in various parts of the media and the body politic people started taking a whack at it, it was a typical tall poppy and they came through it with a lot of market support and finished the year fantastically well.
Who was your mentor? What did they teach you?
I learned a lot about the Australian market from our shareholders in the ECN and I'm lucky enough to know a lot of people in senior positions in the New Zealand market who you can have good conversations with.
Where are you going for the holidays?
I'm taking two weeks in Argentina with Sarah who I'm going to get married to in April. A week in a house on the beach about three hours south of Buenos Aires and a week on a ranch further inland towards the mountains. No cellphone or market coverage, it will be a complete break - and a lot of beef.
What will you be reading?
Collected short stories of Jorges Luis Borges, an Argentinian writer. The God Delusion by Richard Dawkins. A biography of Sandy Weill of Citigroup, and a code breaking thriller based in Latin America.
