NZX upbeat over market's prospects

The sharemarket is back on track after a lacklustre first half and will continue to grow over the next 12 months, NZX chief executive Mark Weldon says.

NZX, which operates New Zealand's main sharemarket, yesterday reported an increased third-quarter net profit of $1.72 million on operating earnings of $2.51 million - up 39 per cent on the same period last year. Operating revenue at $5.54 million was also up strongly.

Weldon was upbeat about the company's outlook for the remainder of the financial year. "NZX would expect to see this strong performance to be sustained through the fourth quarter of 2005."

The company this year reported a sharp fall in half-year net profit amid commentary the share market was effectively shrinking.

In the first half, the main board lost eight companies with a combined market value of $4.8 billion - including Ports of Auckland.

"Clearly Ports of Auckland was tremendously disappointing," Weldon said.

But with the $600 million Vector initial public offer in August, the prospect of a big new listing in Goodman Fielder and expectations of fewer de-listings on the way, "the market has a lot of juice left in it".

"We will have a bigger, broader more balanced market a year from now than we have today," he said.

"Just the addition of Vector and Goodman outweighs anything we've seen on the negative side."

Weldon was also optimistic the new coalition Government would prove market-friendly and might take a fresh look at partial floats of state-owned enterprises (SOEs).

The new Government had the opportunity to make "a material difference to the market outlook".

"If the coalition is a coalition of the willing then what they would say is, "What can we do to drive wealth and investment and savings?"

He hoped the new Government would consider a "corporate-community co-investment approach to infrastructure".

"That would be to sell 30 or 40 per cent of these things to market and that's where they've got an opportunity to make a material difference ... We'll wait and see on that but a lot of people are hopeful they will."

Weldon did not say which SOEs he saw as suitable candidates for partial listings.

In recent times, NZX has expanded outside its core business by setting up a joint-venture share registry business Link Market Service and launching its exchange-traded funds subsidiary Smartshares.

NZX said new Smartshares funds would be launched next year.