NSX battles ASX for market share, asks miners to join the ranks
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Australia’s second stockmarket, the National Stock Exchange (NSX), is challenging the ASX in a quest to bring more resource companies over to its side.
“The ASX top 200 has remained largely unchanged over the last 10 years and yet our economy and the global economy for that matter have changed dramatically over that period of time,” chief executive Ann Bowering told delegates at the RIU Explorers Conference in Fremantle, Western Australia this week.
“In my view, the lack of competition for listings has created an inefficiency in the allocation of capital.
“On a global basis, Australia has the fourth-largest pool of investable funds and yet many fund managers look offshore to allocate capital.”
The NSX (ASX:NSX) had 83 listed companies by the end of 2017 while the ASX (ASX:ASX) had 2282. The ASX has been the dominant market for 30 years.
The NSX burned $1.1 million after banking $424,000 cash in the December quarter — leaving $3.8 million in the kitty.
Customer receipts were down from $1.6 million in the previous quarter.
While Australia’s economy has grown faster than its developed world peers over the past decade, the country’s share market at the end of 2017 was actually smaller than it was on the eve of the global financial crisis back in 2007.
“Australia has been one of the only advanced markets globally without a challenging second stock exchange,” Ms Bowering said.
“The lack of competition in listed equities has led to a stagnant market that has been resistant to change with very little innovation.”
To better position itself to take on the ASX, the NSX has been enhancing its market operations, marketing, distribution model, technology platform and capabilities over the past 18 months and is now looking to resource juniors to help boost its numbers.
“We know the opportunity for growth is in this industry,” Ms Bowering said.
“Overlay that with the sophistication, if you like, of the investor group that sits alongside the companies and the opportunities here, we think it is a natural fit for a venture-type market as we’re styled.”
Calling all resources players
The NSX, which targets companies with a market cap of between $3 million and $50 million — and has a smaller spread requirement than the ASX — currently has just six resource companies.
“Some of the biggest companies we have listed have come from the oil and gas / resources space and so we have had a great experience with them in the past and we’re obviously looking to get more on board now,” Ms Bowering told Stockhead.
The NSX reaches about 90-95 per cent of the Australian and international trading market, according to Ms Bowering.
To extend its reach and access greater pools of capital, the NSX is in talks with overseas markets to investigate the potential for partnerships.
“Over the next five to 10 years equities will become a lot more global,” Ms Bowering said.
“So it makes sense. It’s really important that the Australian exchanges build those relationships, and for us. Because we’re not ASX it’s not an intimidating relationship for the other exchanges to engage with. Hong Kong or Toronto or Nasdaq are very comfortable talking to us about opportunities in our marketplace.”