For all the popular angst about foreign ownership of New Zealand business, it is sobering to read only 36 per cent of companies listed on the NZX last year were foreign-owned, compared with 46 per cent of the Australian stock exchange at the same time. But this is no cause for celebration, quite the reverse. The New Zealand exchange needs more listed companies and it is looking to foreign companies with large New Zealand operations for new listings.
The recent loss of Xero, a rare star among local stocks, has been a body blow to the exchange. Xero has been exactly the kind of technology start-up every country looks to these days for economic success.
Explaining its decision in the Herald recently, founder Rod Drury wrote: "Xero's stock exchange listing in 2007 created a platform for our early success and the ability to ... build a significant global business from New Zealand.
"The early support we received through our listing allowed Xero to expand and contribute significantly to the New Zealand economy, with more than 1000 people now employed here ..."
The company has another 800 people around the world and about 80 per cent of its revenue comes from outside New Zealand. It has high hopes of becoming an even larger software provider, "one of the greatest tech companies on the planet", he said. But it remains based in New Zealand and Drury gave no hint that will change when it leaves the NZX and lists solely on the ASX. He did not explain why it could not be listed on both, merely saying the move to consolidate was, "the logical next step of our strategy to attract strategic investors who own significant stakes in other global platforms that we now consider peers".
