New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>NZX Tracking Brief</h2>
<ul>
<li>NZX August monthly data broadly in line with expectations</li>
<li>Total capital raised robust for the month with new and secondary retail debt taking YTD capital raised ahead of company targets for the year</li>
<li>Data terminals and licences remain at elevated levels post COVID-19</li>
<li>The Funds Under Management division continues to steadily grow (FUM +17% increase vs August 2019)</li>
<li>We expect to see additional FUA added to the Wealth Technologies business (a key catalyst in our opinion)</li>
<li>Rating: OUTPERFORM</li>
</ul>
&nbsp;
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-hVd1qqu3lG_SzvhopUuat-zhNu6YzEmcJ5O_wWk8oju1eKvtXToYaK7eeRIer9OdVyPLqi09Gi9BNEPNl7sud3xjrVJETg7SlmhcoELhBtfSJN23WfRSNt3M&amp;disp=emb" width="311" height="162" class="editor-image img-responsive" data-image-whitelisted=""></figure>
DDoS cyber attack
<ul>
<li>NZX was a target for a number of DDoS cyber-attacks on 25 August which led to four days of interrupted trading</li>
<li>Although an unfortunate series of events in our view this does not currently affect the long term business model for the company</li>
<li>The DDoS attack targeting the NZX website was not a data breach nor an internal issue within the trading and clearing platform</li>
<li>Cyber-crime has increased substantially on a global basis since the start of COVID-19</li>
<li>Kaspersky have said that DDOS attacks have tripled this year, while Microsoft have said that attack volumes spiked to nearly a million a day during the first week of March</li>
<li>Cyber criminals are looking to take advantage of fear and uncertainty, particularly with device sharing, home working arrangements and those using home computers for work</li>
<li>The following article summaries the recent NZX attacks in more detail:</li>
</ul>
<a href="https://www.zdnet.com/article/ddos-extortionists-target-nzx-moneygram-braintree-and-other-financial-services/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.zdnet.com/article/ddos-extortionists-target-nzx-moneygram-braintree-and-other-financial-services/&amp;source=gmail&amp;ust=1599176801339000&amp;usg=AFQjCNGiv0sWKIdjIpg7EpQuxHsURgaVTA" rel="noopener">https://www.zdnet.com/article/ddos-extortionists-target-nzx-moneygram-braintree-and-other-financial-services/</a>
<ul>
<li>Additionally, NZX is also not the only NZ business to be affected by cyber affected with a number of other companies targeted by similar attacks</li>
</ul>
<a href="https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&amp;objectid=12361370" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://www.nzherald.co.nz/nz/news/article.cfm?c_id%3D1%26objectid%3D12361370&amp;source=gmail&amp;ust=1599176801339000&amp;usg=AFQjCNEedDG6q0lYuOhFi3ntCeAqWRPzrA" rel="noopener">https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&amp;objectid=12361370</a>
<a href="https://skifmnetwork.co.nz/2020/09/02/ral-website-targeted-by-cyber-attack/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://skifmnetwork.co.nz/2020/09/02/ral-website-targeted-by-cyber-attack/&amp;source=gmail&amp;ust=1599176801339000&amp;usg=AFQjCNE98ni0lrd043z0QZRC4MrfVbWsvg" rel="noopener">https://skifmnetwork.co.nz/2020/09/02/ral-website-targeted-by-cyber-attack/</a>
Issuer Relationships
<ul>
<li>Post COVID-19 secondary equity capital raises were substantially down for the month in line with expectations</li>
<li>The debt market saw new retail and debt and secondary retail debt listed</li>
<li>NZX exceeds capital raised target for the year set out in March 2020 (NZ$10.5bn vs NZ$9.5bn) vs our revised forecast for NZ$11.9bn (published 14 August)</li>
</ul>
Issuer Relationships Tracking Progress:
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.3&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8I6Xeuqa5Eq4iLGOGvlspL5_YxMvWocwpvwx40WV2UtjUp2zh2c8c8wpIyV3zgbmoG8dXG2wm7w5yPckFIKMtKAgX6Qshv3KzMQfQVpWOJlepvYZM79YvlDkI&amp;disp=emb" width="614" height="303" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Secondary Markets
<ul>
<li>Total cash traded value (NZ$4.0bn) remains ahead of the previous year (+15% on August 2019) but down from the 1H20 average of NZ$4.6bn</li>
<li>NZX continues to benefit from increased retail participation with Sharesies plus ASB now making up 34% of volume (17% August 2019) and 7% of total value for the month (4% August 2019)</li>
<li>Ex-Shareies and ex-ASB the remaining market saw volumes grow +69% from August 2019 to August 2020. (IRESS data)</li>
</ul>
Growth year on year Jan to August 2020, total market traded volume and non-retail traded volume (IRESS data)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.4&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-CgBqUlVc-a2xlHiTivJtfik5NCC3btJMn2NvbkCuYCYn3mpvzi3I4CpBaewz8qlGmG8Lj3_JSDl6fUxeQoDeKzgFZxEQ7fOHZ7QwRg20wwRRGqprc1LcnIiA&amp;disp=emb" width="610" height="417" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Combined ASB and Sharesies % volume and value of total market Jan-19 to August-20 (IRESS data)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.5&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ80ObchWACHr85jhm6iXHbg7cFTBzxGNxeK5OlLutlLVrx0CqRDR7JcAQAxIsSaRMFb9Bpi_uAkrTfebqtZlkUOMj62n5WTvhQZuNhuQPqoW493xhoHys3L6lU&amp;disp=emb" width="605" height="437" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Total cash traded Jan-19 to August-20 (NZX data)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.6&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_YLqAFmPbG0bTFsi1_sYsiLpuc6DzskbB3eVH581-QT0M6pvIBs-GXjZUmXniwyu_u-WFZYVJAfXCkZ35RCFvMNo0frsh_WB0uPzVmOjgTR2ilASd08CqY7Nk&amp;disp=emb" class="editor-image img-responsive"></figure>
Secondary Markets Tracking Progress:
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.7&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-kyJRvz5fuQk6idx8w8qdSbKJ2G0M8Z-l8UjG4h7t7ad3-RbzvXVNL7IzP28ev6j9Wl3RcZuKNe8D980HIzmnijGjwflz5Gji-F1bTPQDXlZFqVLvaDzx0TOM&amp;disp=emb" width="603" height="289" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Data and Insights
<ul>
<li>Total terminals and licences remain at elevated levels for August post COVID-19 disruption with monthly total terminals and licences +19% on the previous year</li>
<li>The FY20 average monthly total YTD is +12% greater than the monthly average for 2019.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.8&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8RmjcjNcRweH4ZZFW2i8FSOKm1-OrBOLAczx78FHqD7YumfJobREQqdEij7vX0OC_gjPBHupb7ErZHyuGClOaCVICbOJVJgF_rWFGjYWzyZW75f1epL7D7Ygg&amp;disp=emb" class="editor-image img-responsive"></figure>
Funds Management
<ul>
<li>Both the Funds Under Administration and Wealth continue to make steady progress with Funds Under Management +17% year-on-year and Wealth Technologies +52% year-on-year.</li>
</ul>
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.9&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_EzTusGyQ1rk_siuhugpIx9qyPY2UKzqBCRFv3ZBpjJPC0iQzqjEwTDIGsSsfWypj4JWyvQsOZz8jhXDvfk42E9-LeihHl9r-uZffz-4sJ0k8aq7L50-7MUNY&amp;disp=emb" width="589" height="335" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Jamie Foulkes Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1676758766728401404&amp;th=17450b36e8de51fc&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_SM7LuFXWKapsLcCLmqj_gddb7_sIYtSeUyIdDQ13Ty88-GUAnddiycvrwvMhG05S3w_q3X_3k6Aelh8qdJmXJEquggAq_M7c1i5745Q6qEBn2aQkQrlRC3ug&amp;disp=emb" class="editor-image img-responsive"></figure>
P:+64 4 914 2217 |TF:0800 367 227 Level 22, NTT Tower, 157 Lambton Quay, Wellington

NZX Tracking Brief

NZX August monthly data broadly in line with expectations
Total capital raised robust for the month with new and secondary retail debt taking YTD capital raised ahead of company targets for the year
Data terminals and licences remain at elevated levels post COVID-19
The Funds Under Management division continues to steadily grow (FUM +17% increase vs August 2019)
We expect to see additional FUA added to the Wealth Technologies business (a key catalyst in our opinion)
Rating: OUTPERFORM

&nbsp;

DDoS cyber attack

NZX was a target for a number of DDoS cyber-attacks on 25 August which led to four days of interrupted trading
Although an unfortunate series of events in our view this does not currently affect the long term business model for the company
The DDoS attack targeting the NZX website was not a data breach nor an internal issue within the trading and clearing platform
Cyber-crime has increased substantially on a global basis since the start of COVID-19
Kaspersky have said that DDOS attacks have tripled this year, while Microsoft have said that attack volumes spiked to nearly a million a day during the first week of March
Cyber criminals are looking to take advantage of fear and uncertainty, particularly with device sharing, home working arrangements and those using home computers for work
The following article summaries the recent NZX attacks in more detail:

https://www.zdnet.com/article/ddos-extortionists-target-nzx-moneygram-braintree-and-other-financial-services/

Additionally, NZX is also not the only NZ business to be affected by cyber affected with a number of other companies targeted by similar attacks

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&amp;objectid=12361370
https://skifmnetwork.co.nz/2020/09/02/ral-website-targeted-by-cyber-attack/
Issuer Relationships

Post COVID-19 secondary equity capital raises were substantially down for the month in line with expectations
The debt market saw new retail and debt and secondary retail debt listed
NZX exceeds capital raised target for the year set out in March 2020 (NZ$10.5bn vs NZ$9.5bn) vs our revised forecast for NZ$11.9bn (published 14 August)

Issuer Relationships Tracking Progress:

Secondary Markets

Total cash traded value (NZ$4.0bn) remains ahead of the previous year (+15% on August 2019) but down from the 1H20 average of NZ$4.6bn
NZX continues to benefit from increased retail participation with Sharesies plus ASB now making up 34% of volume (17% August 2019) and 7% of total value for the month (4% August 2019)
Ex-Shareies and ex-ASB the remaining market saw volumes grow +69% from August 2019 to August 2020. (IRESS data)

Growth year on year Jan to August 2020, total market traded volume and non-retail traded volume (IRESS data)

Combined ASB and Sharesies % volume and value of total market Jan-19 to August-20 (IRESS data)

Total cash traded Jan-19 to August-20 (NZX data)

Secondary Markets Tracking Progress:

Data and Insights

Total terminals and licences remain at elevated levels for August post COVID-19 disruption with monthly total terminals and licences +19% on the previous year
The FY20 average monthly total YTD is +12% greater than the monthly average for 2019.


Funds Management

Both the Funds Under Administration and Wealth continue to make steady progress with Funds Under Management +17% year-on-year and Wealth Technologies +52% year-on-year.


Jamie Foulkes Analyst, Equities

P:+64 4 914 2217 |TF:0800 367 227 Level 22, NTT Tower, 157 Lambton Quay, Wellington

NZX

NZX: Tracking Brief