How the NZX degrades itself

by Winslow Taggart

Mark Weldon did some great things with the NZX but under his stewardship, the NZX also degraded itself with a number of companies listed on its bourse.

Big listings that went bad like Feltex get all the media attention, but the other area that lets the NZX down is with joke companies that maintain an NZX listing when it’s pretty obvious that they are pathetic shells or fiscal three ring circuses.

Two good examples of this come from two very different types of mismanagement.

The first is that of Blis, a company that makes probiotic products. Priobiotics are “good bacteria” that help digestive tracts, prevent colds etc. Blis launched several years ago and proceeded to burn cash at a fearsome rate. Sales never took off like promised, and the share price has gone from just over $1 in late 2001 to 1c today. The supposedly very nice people who run Blis are scientists from Dunedin who have utterly failed to commercialise their product. It has failed as a company in its own right, and would be better to sell out to a health foods company who know how to market health benefits to consumers.

The second example is that of a financial advisory company called IRG, born out of the failed wheelings and dealings of Dorchestor Pacific and Viking Capital. IRG has announced just today a loss of $1.14 million, when it’s entire market cap is $1.55m! From a peak of 35c in early 2007, IRG is now worth 0.003c per share, in other words, less than a joke. IRG is ably chaired by some goose called Marvin Yee and run by Brent King, whose run-ins with corporate NZ are easily google-able, like this article here.

Putting aside the obvious point that people should be careful when considering investing in or using the services of a financial advisory firm that loses almost as much money in one year as their entire market cap, the NZX should really do the honourable thing and suspend this joke to at stop people from trading in something so pointless.

The NZX should bite the bullet and start notifying the joke companies on the NZX that if they don’t meet market cap, liquidity and fiscal requirements, they’ll be suspended. Here’s hoping Tim Bennett leads the NZX to focus on quality over quantity of listings.

  • REAPER CREW

    good ol Bret King. was the head at Dorchester, got turged out for many things including rooting all the staff (wonder if the $300K 1 off payment to a staff member was published), then started Viking Crapital, another dog, then he ended up with a gay resort in QLD. NZX needs to take a fucking good look at itself

    • Guest

      Sure about that? I thought the only balls that Brent King touched were cricket balls?

      • REAPER CREW

        positive – Asian lady. used to fuck every which was on the board table. she was maried, and i think the ghubby may have worked there to. Gay resort yes – up in QLD. not sure if its a gay thing now but it was

  • Gazzaw

    Well said WO. I’m surprised that the Shareholders Assn haven’t pitched in on this issue already.

  • MarcWills

    As long as NZX can continue to clip the suffering shareholder’ s tickets, why would they give up on a sure thing? Biggest bunch of leeches since William Harvey discovered circulation of the blood. It is unbelievable the amount of shareholders funds that have been absorbed into the NZX coffers in the few years since it was established, and contributed nothing.

  • K.i.D.

    It’s not the sharemarket’s job or function to act as a gatekeeper and decide whether companies are “good” or “bad”. There are minimum listing requirements, and if these are met, then it is up to the market to decide whether to buy the securities or not.

    Are you even aware of what the listing requirements are? These are contained in the listing rules.

    Who do you propose should decide whether a company is a “joke” or has “goose” directors?

    A free market is a free market, and if people are stupid enough to buy shares in “joke” companies then there will always be a market for them. This should not, however, affect the requirement for full and transparent disclosure to the market.

    In the interests of balance you should note in your short opinion piece that the NZX has rejected so-called “joke” companies in the past. THe prime example is Bridgecorp. This was not on any subjective basis, but because that company did not meet the listing rule requirements. That company went on to fleece investors via newspaper advertisements and backhanders to financial advisors.
    The true focus of your ire should be Jane Diplock and her completely ineffective regulation of the Securities Act and regulations during her tenure.

    • Winslow

      Yes, it is the sharemarket’s job to act as a gatekeeper. They have a regulatory role. you might argue that it’s improper for the company to also be a regulator, but they have that role nonetheless.

      https://www.nzx.com/market-supervision

      It may be that when a company is trading at penny dreadful levels or thereabouts, and starts testing liquidity and/or good character tests, that the NZX would spur into action to remove the company from the NZX register.

      Agree regarding Diplock. Didn’t do nearly enough.

       

      • K.i.D.

         Thanks for the link. What that proves, I’ll have to keep wondering. As I said, the NZX has a gatekeeper function to let companies on the market only insofar as it has minimum listing requirements. If you want the NZX to undertake a review of the financial health of companies or the director’s past lives, then please explain how you want this to be carried out!?

        What criteria would you like the quasi-beauracrats at the NZX to assess that you think they would be better qualified to assess than brokers and punters who buy shares? If the Securities Act standards are met, then it is not the NZX’s job to determine whether a director meets a “good character” test (which I note you have not defined). Incidentally, if Alan Hawkins wants to IPO a new company, the fact he does not disclose his Equiticorp past is not a failing of the NZX, rather the rules under the Securities Act.

        If there are penny dreadfuls which do not meet the ongoing liquidity and market cap requirements of the NZAX or NZSX listing rules, investors can always complain if the NZX is not doing anything about it. I presume you think there are companies which do not meeting these requirements? If so, can you name them?

        The bottom line is, I prefer a securities market that does not make subjective assessments of the listed securities and only applies the rules at its disposal.

        • MrV

          You are absolutely right, there can be no ‘decider’ as to what is a good or bad company. Many high price stocks can fall in value over time, as can a cheap stock increase in value. Although the former happens far more than the latter.
          Small companies are generally not on the main index anyway, that is why there are various indicies.

          The main problem NZ has is a lack of publicly listed companies that are expanding, but also NZers prefer to put money into property. Also trading fees for NZX are so expensive through NZ brokers, in the US markets you can trade shares for very little per transaction to the average consumer, but here the fees are extortionate. Probably so the executives can pay themselves high salaries, while pretending the NZX is bigger than the flea market it is.

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