NZSE Announces Proposal For Reforming And Improving Indices

The New Zealand Stock Exchange has announced today a draft proposal for reforming and improving the NZSE market indices.

This is part of a series of changes initiated by the NZSE, designed to improve the New Zealand Capital markets.

The proposal outlines three major changes:

1. Eliminating the current NZSE40 and NZSE30 indices and replacing them with an improved and expanded NZSE50 free float index
2. Adjusting the construction of the NZSE10 & NZSEMC indices
3. Reporting all indices in Gross rather than Capital terms

The Exchange is seeking submissions from the market on the proposed new indices, and after a thorough consultation process, is planning to re-launch the newly constructed Indices in early 2003.

Commenting on the proposed changes to the indices, Market & Relationships Manager for the NZSE Geoff Brown said "The changes we are proposing will restructure the indices to improve their overall investibility. By moving the major indices to Free Float, the tradable component of companies in the index is larger and more transparent, and as a consequence delivers a more accurate benchmark for the market.

"Combining this with a shift to Gross Index reporting, the Indices will better reflect the overall performance of the market, given New Zealand's extraordinarily high dividend pay-out ratio".

The changes being proposed to the construction of the NZSE indices will bring them in line with other major markets, and more consistent with major worldwide indices such as the ASX200, MSCI and FTSE100.

NZSE Chief Executive Mark Weldon said "Indices represent the pulse of the New Zealand Capital Markets. Reforming and improving them is a major milestone for the NZSE. This proposal demonstrates our commitment to market participants to deliver a well structured market environment.

"The proposed NZSE50 brings to the market a headline index that is more representative of the performance of the breadth of companies listed on the Exchange, and more accurately reflects company performance.

"With the advent of the Cullen Fund, and the excellent market performance of New Zealand versus overseas markets creating increased demand for domestic investment, it is a top priority for the NZSE to ensure our indices are highly investible.

"Combined with the other market initiatives in place, we are now well on the way towards creating an improved overall market infrastructure for all participants."

The proposal for the Reformed Indices will be available for review online at http://www.nzse.co.nz from 4pm 1 October 2002.