KEY POINTS:
Falling markets haven't dented a good year for sharemarket operator the New Zealand Exchange.
NZX shareholders should be smiling at the company's fifth annual meeting next Thursday - in February, the company lifted its dividend to 21c a share from 16c a year ago.
ABN AMRO Craigs adviser
Nigel Scott said the exchange had enough plans in place to keep increasing revenue, with moves to expand into Australian venture AXE and the carbon trading market TZI.
Flow-on effects of KiwiSaver are expected to help the NZX by improving market activity over the next three to 10 years.
NZX shares closed at $7.61 on Friday, having traded as high as $11.80 mid-last year - a level Scott said was overpriced.
"It's returned to a more normal level now."
NZX, which is listed on its own exchange, raised profit by more than a third last year, posting an $8.7 million annual net profit after tax.
Operating revenue rose by just over a quarter in the year to February to $31.5 million.
At the time, NZX chief executive Mark Weldon said the strong result showed the resilience of the business during a year of volatile and uncertain markets.
Shaky global markets and high bank interest rates have seen investors shy away from the sharemarket this year.
The total value of first quarter trades fell 9 per cent on last year to $7.2 billion. The total number of trades was also down, dropping 11 per cent on the first quarter of last year.
But while low trading volumes mean less money for the exchange, Forsyth Barr analyst Guy Hallwright said trading volumes were only about 17 per cent of NZX's total revenue.
"It would really only be a problem for them if people just stopped trading."
Of greater concern was the low number of new listings.
New listings had been weak this quarter, a trend that might continue if the global markets have a bad year.
Income from real-time data terminals might also suffer in a market downturn. "If you get the brokers and fund managers downsizing and getting rid of people they might get rid of the number of terminals they have," said Hallwright.
NZX currently has nearly 11,000 terminals worldwide, up 24 per cent on last year.
Hallwright said NZX had branched out since becoming a commercial entity in 2002.
"They've been quite successful at diversifying what was mainly a trading-based and fee-based revenue stream into an awful lot more."
The exchange had added products such as Smartshares, and this year's moves into Australia and the carbon trading market were "sensible", he said.
"The strategy so far has been to keep adding more strings to the bow."
"The question is, what sort of year we're going to have on markets? If we have more bumps and a market that drifts sideways through the year, [the gains] will take longer to materialise."