KEY POINTS:
So here's the nightmare scenario. The NZX gets stuck at current levels for the next 12 months leaving its blue chip stocks at rock bottom prices. Then the big international corporations and the private equity players get their credit issues sorted and begin bargain hunting.
Once again - as it was in the early part of this decade - impatient New Zealand investors offer them the low-hanging fruit.
Fletcher Building, for example, closed yesterday at just $6.46. It dipped as low as $5.98 this week.
A $9 per share takeover offer would have been laughable last year when the shares traded up as high as $13. But that's now a 40 per cent premium. History suggests that local investors don't have a lot of stamina when it comes to riding out a downturn.
Contact Energy has an uncertain outlook with British giant BG attempting to buy its parent company Origin. BG wants to sell Origin's Contact stake quickly presenting a golden opportunity for a big player to grab control and launch a full takeover.
The fate of The Warehouse hangs on a Court of Appeal decision which threatens to unleash two bidders - Woolworths and Foodstuffs.
With The Warehouse trading at just $3.84 it is looking like a sitting duck if the sale gets the green light.
Then there's Pumpkin Patch, Fisher & Paykel Healthcare and F&P Appliances. A cursory glance at the NZX-50 board indicates that more than a quarter of its market capitalisation could easily be snapped up in takeover plays.
Of course there is the once-mighty Telecom, tethered to the NZX by the Kiwi Share rule - restricting foreign ownership to less than 50 per cent.
But where its market cap once accounted for more than 20 per cent of the exchange, it has now dwindled to about 12 per cent.
The prospects of a big new listing to fill the void look slim.
That floats have been scarce this year is no surprise given the atrocious market conditions. But even the good times of the past two years has seen little of any real size coming on to the exchange.
Pike River, which listed last year, has been a star but it still has market cap of less than $600 million. Other than that there has been nothing to trouble the Top 50 since Vector in 2005 and Rakon in 2006.
The likes of 42 Below (already departed), Xero Live, Burger Fuel and Diligent aren't going to save us. So what is?
A Fonterra listing would have been a saviour. But the prospects for that have dwindled with farmers telling the board they don't like the idea. Farmers seem unable to accept the notion that selling a 20 per cent chunk of the Fonterra Brands business would not amount to giving up control.
The same mindset in middle New Zealand voters has forced National to rule out even the partial sale of state assets in its first term.
The idea of selling partial stakes in state owned enterprises such as the power companies is one that could revive the market.
It is an idea that should not be forgotten.
Even this Labour Government - no champion of investment bankers - can see that something needs to be done.
If we don't want this country to become a branch office of Australia - if we want to keep exciting, high paying jobs for our children in this country - then we need to start talking about the future of the NZX.
Liam Dann is the Herald's business editor
