Broking firm First NZ Capital (FNZC) has done a deal with Auckland-based stock analysis company Shareclarity to provide equity research for independent retail investors.
The deal follows FNZC’s decision late last year to buy ANZ Bank New Zealand’s online trading platform ANZ Securities, and reclaim its old name Direct Broking. Once that deal goes ahead later this year, FNZC wants to develop the “self-directed” side of its business – where individual investors and small trusts run their own share and bond portfolios, rather than going through a broker.
The tie-up with Shareclarity gives clients access to an online trading platform alongside independent analysis of companies listed on the NZX, ASX and Hong Kong stock exchange, FNZC head of direct wealth Fiona Mackenzie said.
She said the self-directed market is well developed in the US, Europe and increasingly Australia, but hasn’t gained as much traction in New Zealand. In Australia, for example, about A$1 trillion (around a third of the total) of superannuation funds are self-managed, whereas many New Zealanders don’t even realise they can look after their own KiwiSaver.
The lag in a local self-directed market is partly because there haven’t been a lot of choices for New Zealand investors, Mackenzie said, and partly because Kiwis have traditionally been wedded to property rather than shares.
She says it’s difficult to get data on the number of self-directed small investors in New Zealand, although she has “certainly tried”.
“But anecdotally, it’s a surprisingly small number, when you consider how active retail self-directed investors are in other markets. And I believe that’s because the tools haven’t been there for people to engage. There are a range of clients in New Zealand who want to make their own investment decisions, and people with the right tools feel empowered to make those decisions.”
The tools include the market, such as the NZX or ASX, the online trading platforms as infrastructure, and information, she said.
“You can’t make decisions without great information. This deal with Shareclarity for the first time gives mom and pop investors a digital research product so they can understand shares a lot better.”
Mackenzie said the Shareclarity product doesn’t just provide company data and valuations, but allows investors to test some of the assumptions that are driving a valuation.
Take someone thinking of buying Air New Zealand shares, for example, and wondering how the future value of those shares will be impacted by the oil price. Shareclarity’s model lets an investor put in their best guess about the oil price, then the system crunches the numbers about how that will impact Air NZ’s value.
“No one else is doing that. It’s a powerful and flexible tool.”
Shareclarity was founded by South African-born analyst and entrepreneur Daniel Kieser in 2014 and it took two years, and three rounds of capital raising, to develop the software and bring it to market.
Shareholders include Sir Stephen Tindall’s K1W1 venture capital fund, investor and commentator Shamubeel Eaqub, and former Citigroup director Mark Benseman.
At the moment Shareclarity has five analysts and covers 260 companies on the New Zealand, Australian and Hong Kong stock exchanges. Kieser says as more customers come on board in coming months (bringing more money into the business) he wants to add at least three more analysts and expand company coverage to 350-400.
While most customers are in New Zealand at the moment, Kieser also plans to take his product to an export market.
“No one has built this sort of platform globally. Having a strong presence in Australia and Hong Kong is a primary focus, but Asia is very interesting to us because they are moving into more of an investing mindset.”
Europe is also a possible market, he said, with new European Union rules coming in this year forcing more transparency between investment companies and the research they use. In addition, banks and fund managers are slashing their in-house research teams as they seek to cut costs. Kieser says Shareclarity might have a role to fill that gap.