KEY POINTS:
BHP Billiton, Commonwealth Bank of Australia, National Australia Bank, Rio Tinto, Telstra and Woodside Petroleum. These are Australia's six largest listed companies and they each have a market capitalisation larger than the entire New Zealand sharemarket.
At $54 billion, the combined value of all the companies on the New Zealand sharemarket's main board is at its lowest ebb since 2004 on a nominal basis - or the year before when adjusted for inflation.
Since then, the overall economy, as measured by GDP, has grown by almost 16 per cent.
This alarming phenomenon has not passed unnoticed by the Government, which yesterday said it would shortly launch a taskforce to come up with a blueprint for deepening our capital markets. But has it left it too late?
Up until last year, even as our economy appeared to be booming, the sharemarket was being hollowed out as cashed-up Australian corporates and rapacious private equity firms jacked up on cheap credit, picked it over, and snaffled some of our best and brightest businesses.
The credit crunch may have burst the private equity bubble, and overall merger and acquisition activity has largely paused, but the turmoil on international markets has continued to siphon value out of the sharemarket.
The share prices of a number of our remaining blue-chip stocks such as Fletcher Building and SkyCity have fallen to levels that must surely make them extremely attractive to overseas buyers.
While potential bidders are probably, like most other market participants, hunkering down as the credit crisis wears on, it's reasonable to assume that any sign things are blowing over will see them return to snap up some bargains.
Should that happen, the already skinny looking NZX may be in danger of withering away completely.
The Shareholders Association's Bruce Sheppard tells of attending a Ministry of Economic Development talkfest late last year where the participants included fund managers, brokerage bosses and chief executives of big listed companies. With very few exceptions, Sheppard said: "Not one of them said NZX has a future."
Sheppard said the general consensus was that it was "only a matter of time before the planets line up and it won't be economic to run NZ Inc from anywhere other than Sydney as a branch operation".
"Unfortunately a whole bunch of those stars we thought needed to line up for that outcome to become reality have now done so."
Some might argue that as long as our companies are getting the capital they need, does it really matter whether they are listed in New Zealand or not? Furthermore, the Australians now own virtually all of our banking sector and the sky hasn't fallen has it?
So what would New Zealand look like without its own locally controlled capital markets?
Adelaide, reckons NZX chief executive Mark Weldon, where "there ain't a lot doing".
"We would feel very provincial, there would be no bankers or investment bankers and few financial advisers. New Zealanders would essentially be unable to find NZ dollar investments, because it would be uneconomic for ASX or someone like that to run two infrastructures, it doesn't make sense.
"You can't, for example run dual currency settlement systems, they just don't work, New Zealanders would be taking currency risk on things that are pretty basic."
But there would of course, as Sheppard points out, be a way around the type of currency issues the loss of a local sharemarket would throw up.
"When we do eventually close down NZX, which is looking increasingly inevitable, next up will be a common currency with Australia, next, statehood of Australia. That may be the only way out for New Zealand now, sickening isn't it?"
Much as we have a great deal in common with our neighbours across the Tasman, most New Zealanders would probably prefer that we retain our sovereignty and therefore a healthy measure of economic self determination.
It's those issues, says Weldon, that mean the health of our sharemarket and other capital markets should be of interest to New Zealanders whether they own shares or not.
"I really think it's time for a national conversation and I just bloody well hope it's a part of this coming election campaign on both sides.
"If we do nothing, the slow decline, the slow loss of sovereignty, the slow loss of a competitive setting will happen. Without having had a discussion about it, we'll end up like a province.
"If we are going to be a state of Australia, let's have a definite strategy and get what we want out of it. If we're not, let's recognise that there's some risk and let's refocus tax, savings, immigration and carbon emissions policies."
It's those areas Weldon believes require work in order to give New Zealand the competitive advantages needed to ensure the future vitality of the sharemarket, which he points out is "fundamentally a mirror of the broader economy".
The Government has clearly been mindful of New Zealand's capital markets issues, and Weldon acknowledges its work on relevant tax issues and its crack at boosting national savings through KiwiSaver.
On Monday, Commerce Minister Lianne Dalziel will announce details of the new capital markets taskforce. The group will comprise "high profile New Zealand finance and investment experts", including Weldon, who will work with Government officials and report to senior ministers.
One thing that is sure to be discussed is the prospect of at least partially listing some state-owned enterprises, which Weldon has advocated for some time.
Another chunk of the economy that is not particularly well represented on the sharemarket is agriculture, although that may change with the industry reshaping going on.
It's safe to assume that tax will also be on the table.
While this week's news that Australia will look at the longstanding transtasman sore point of mutual recognition of imputation and franking credits appeared positive, Weldon was clearly sceptical.
The status quo, which New Zealand wants changed, provides a powerful economic incentive for Australian acquirers of Kiwi businesses to delist them from the NZX, thereby avoiding double taxation.
Weldon believes Australia will continue its "masterful job" of stringing New Zealand along on this issue while its corporates continue their buy up of our companies which in turn has substantial benefits for the Australian Tax Office.
The circuit breaker has to be New Zealand "doing something quite different and aggressive that gives Australian corporates options around where they locate things".
No matter what the taskforce comes up with, quick fixes are unlikely and KiwiSaver will take several years to gain sufficient scale to make a real difference. Can our sharemarket hang on long enough for the cavalry to arrive?
Market commentator Arthur Lim sees real danger in the prospect of a fresh wave of corporate activity as bidders look to take advantage of the bruising losses our blue chips have suffered.
But he also points to encouraging signs emerging before sub-prime hit that local investors were no longer such a soft touch for acquisitive Australians waving wads of compulsory super scheme cash.
"The one feature to note in the New Zealand market is that for a change, investors, particularly institutional investors, have been increasingly reluctant to sell their shares. Look at the offers for Tourism Holdings and Contact Energy. Investors have perceived that a lot of New Zealand assets and companies have been sold too cheap and this time around they steadfastly held on to them."
He hopes investors remember that.
While the outlook for listed companies' earnings and the wider economy may look bleak at present, Lim believes investors should take comfort from a number of cushions that are in place, including our robust dairy sector, strong terms of trade, the scope for interest rates to fall and the capacity the Government has to pump cash into the economy.
Yes, the market may be on the ropes, but it's not out for the count just yet.
