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Research Coverage Not Available On 42 Percent Of NZX Companies

Fuseworks Media
Fuseworks Media

Wellington, Aug 5 NZPA - There is no research by analysts available on 42 percent of companies listed on NZX, according to the Capital Market Development Taskforce.

The taskforce released a progress report this week in which it referred to a report on the research market in New Zealand it commissioned from Esperance Capital.

That report found that no analyst research is available on 42 percent of companies listed on the NZX and a further 13 percent of NZX companies only had one or two analysts covering them.

"Research on smaller companies is of variable quality and not readily accessible to all potential investors," the taskforce said.

Analyst coverage has been shown to improve the liquidity and depth of securities markets and raise prices, lowering companies' cost of capital.

Research also improved market efficiency, the taskforce said.

Other markets had this problem but it may be acute in New Zealand where listed companies were on average smaller than in overseas markets.

Traded volume is lower for small companies, making it uneconomic for the broking industry to research them.

The taskforce members include Rob Cameron, Franceska Banga, Jonathan Ling, Rob McLeod, Gareth Morgan, Adrian Orr, Cathy Quinn, Scott St John, Mark Weldon, Nigel Williams and Mary Holm.

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