The New Zealand equity markets are heading for another tough year, with more companies leaving the stock exchange than are listing, and little interest in the smaller company markets.
Chapman Tripp's Equity Capital Markets report noted only three companies listed on the NZX Main Board last year, as local companies opted to sell privately, raise money through crowd funding, or list on overseas markets, particularly the ASX.
A report author and Chapman Tripp Partner Rachel Dunne said the number of listings on the main board fell last year for the first time in nearly five years.
She said the outlook is no better, with a number of takeovers such as Hellaby Holdings removing companies, while others have failed and disappeared including the retailer Pumpkin Patch and software company, Wynyard Group.
Ms Dunne said the incoming chief executive of the market operator, NZX, will have some big challenges to deal with.
"We've actually had three takeovers already this year and we certainly haven't had an IPO (initial public offering of shares) announced yet. And there could be future potential insolvencies as well that will result in delisting," she said.
"It's a really bad thing for New Zealand's capital markets."
She said the NZAX and NXT markets, aimed at listing small companies and preparing them for the main board, have not performed to expectations, which indicated the local market was too small to sustain these junior boards.
Ms Dunne said small companies seemed to prefer crowdfunding, which allowed companies to raise money from the public without having to contend with the costs and regulations that go with listing.
"One of the things we're asking is, is New Zealand really big enough to sustain these junior boards? Our nearest competitor, the ASX, only operates a single equities board."