New Zealand looks for the silver lining despite economic headwinds

Speakers at the ANZ-KangaNews New Zealand Capital Market Forum, which took place in Auckland on 21 March, believe the local market continues to offer opportunities despite the obvious challenges of an economy in recession. The everincreasing urgency of the energy transition, a significant infrastructure shortfall and the role of the fixed income market took centre stage in discussions.

“New Zealand is a small, open economy. It is a significant importer of capital and runs significant
current account deficits. This means having a vibrant, dynamic and efficient capital market is a
key part of New Zealand’s prosperity – and this has never been truer than in 2024.”

“A common theme in every sector of the economy is that the more difficult conditions are sorting the wheat from the chaff, the well from the poorly run firms, and those with and without cash buffers.”

“During COVID-19, we built more houses than ever before even as the population was shrinking. Now, when we convert the net migration numbers into housing demand and then set this against growth in housing supply as proxied by consents, it is clear that we are eating into supply and making the housing shortage worse.”


“New Zealand has some very good infrastructure – but it is ageing, and every year the infrastructure deficit seems to increase. It also seems that the same projects are being debated but no decisions made. The shovels aren’t hitting the ground.”

“The Infrastructure Commission’s independent 30-year plan is vital. We don’t have a crystal ball but with a pipeline we can make some assumptions about social and economic requirements, and industry can prepare its resources to be able to deliver. We will have more efficient spending and a more productive economy as a result.”

“We make things way too complex. The Resource Management Act has a lot of red tape, traffic management has become hugely expensive and we overdesign things, all of which add another level of complexity. Trying to avoid risk can actually invoke more risk and is counterintuitive at times.”

“SuperBuild is NZ Super’s preferred delivery model for infrastructure. SuperBuild works with best-in-class providers and contractors to deliver, design, construct and operate projects, ensuring ESG and other vital metrics are factored in and that there are robust investment returns.”

“New Zealand issuers are crossing the Tasman Sea to raise funds, and investors to invest their funds. We need a mutually beneficial outcome to support more depth and a more diverse local option.”

“Our balance sheet is growing and more than 100 per cent of deposit growth is term deposits. We haven’t seen much impact from the funding for lending programme so far – I expect this will be a 2025 story, as maturity profiles are concentrated next year.”

“The issue with New Zealand retail deals is there is never a market update between open and close. There is therefore no chance for IPTs to tighten. The institutional market offers more opportunity for two-way information flow.”

“There is a natural constraint to volume in the New Zealand market: it can be challenging for issuers to populate a curve in size. For our multibillion dollar funds it can be hard to get set in NZ$200-300 million size transactions. We don’t want to dominate an issue and we want the bonds to trade.”

“It is great that Australia is in a Goldilocks period but it is important to remember that a couple of years ago the market was closed. Recognising this, we remain open to other markets – such as USPP and Europe – and to exploring more innovative bank products that sit between traditional bank lending and public markets.”

“The New Zealand market has got itself into execution behaviour that prohibits price tightening. We can see potential pricing benefits for issuers and scaling benefits for investors from a longer offer period and greater flexibility in price setting. However, we recognise that the more iterative pricing process used in other markets is not necessarily practical for New Zealand’s retail-heavy transactions.”


“Companies can do as much as possible but what will really jump-start the energy transition is a supportive environment. For example, subsidies in the US associated with the Inflation Reduction Act have significantly shifted the dial on investing in wind and solar.”

“Nature provides a range of ecosystem services that our businesses rely on. It is often difficult to appreciate the value nature is providing and to measure that value. We need to take the same market-based approach to natural capital as we have for climate, to facilitate the necessary change to a nature-positive economy.”

“I really like the term ‘cautiously curious’ as a guiding principle for absorbing AI into organisations. There are downside risks but also tremendous upside opportunities. Be well educated, and test and learn in safe environments. When large organisations are trying to adopt new technology, cautious learning creates an environment to support intelligent decisions.”

“Even if we stopped emissions from fossil fuels right now, business as usual emissions from food production alone would take us well beyond the carbon budget for 1.5°C. However, awareness is building and with this comes ambition – which leads to targets, followed by action.”

“Convening and galvanising all the actors in global supply chains – including figuring out who will share the costs and benefits of transition – is the work underway and ahead for the foreseeable future. But the single most important enabler of change is access to innovative and sufficient transition finance.”


“We realised that with COVID-19 came tragedy, and devastation to healthcare systems, to economies and to communities in New Zealand and all around the world. But from a business perspective, very early on we started treating it as an opportunity and not a threat.”

“New Zealand is not good at telling its own story and we haven’t really got any great ideas of who we want to be. We have some thoughts about being the most beautiful, small, developed economy – but this doesn’t tell us how we’re going to get there. We need to define what makes us great, or what should make us great.”

“Fiscal and monetary policy have at times been at cross purposes. At face value, expansionary fiscal policy has contributed to additional NZGB issuance and, while taking down this issuance has been challenging for the market, bond buyers now have more clarity on things like the LPR and the market has been eager to latch on to the next cycle.”

“We haven’t seen a lot of evidence that the retail investor base is shifting into fixed income because of the higher interest rate environment, either via allocations into income assets through growth or from defensive flows. Retail investors that have experienced horrible times in bond funds over the last 3-4 years are not coming back – at least, not yet.”

“There is considerable effort by central banks globally to ascertain how they might adapt monetary policy, supervision of financial institutions and the management of reserves as they consider climate risks. Going forward, recognising that climate risk is a systemic risk to the financial sector will increasingly influence decisions made in financial markets.”

“NZGBs are being traded off swap spreads in certain parts of the curve, which appears to be related to the size of our issuance programme. This dynamic has been helpful in opening up our supply to bank balance sheet investors, but it comes with additional cost.”

“I believe a significant investment in the transition is going to come from business and private capital, because private capital wants to be where future growth is going to be – and low-emissions enterprises will be a significant source of future growth.”

“Successive governments, through good intention, have invested significant capital in social programmes to break poverty cycles – with perpetual years of failure. Meanwhile, nongovernment programmes have been enormously successful. We need to use this data for innovation, so the dollars go to the absolute best value use.”


“New Zealand has the potential to develop a profitable, sustainable bioproducts industry from forests. This would require investment, changes to government policy and a rethink of the current forestry sector structure. But shifting current raw log exports to higher-value bioproducts could lift forestry sector exports significantly.”