By DANIEL RIORDAN
Stock Exchange managing director Bill Foster expects most of our biggest companies to follow Baycorp and take their head offices and primary listings across the Tasman within five years - and he is happy about it.
Mr Foster said the exchange had to accept that growing companies such as Baycorp would become too big for the local market and would look overseas.
"That's a perfectly healthy and natural development for a growth-oriented economy.
"We've seen several of our larger companies that haven't gone offshore stagnate in the local market and resort to profitability being their only objective rather than growth."
As companies could earn more outside New Zealand they would inevitably move, he said.
Baycorp continues to bask in the afterglow of Tuesday's announcement of a merger with Australia's Data Advantage. Baycorp shares touched a record $13.90, 12 per cent above its pre-merger level.
The company still expects its New Zealand operations to expand, and will be dual-listed on the NZSE.
Mr Foster said the real test for the NZSE was to encourage new companies at the bottom end to replace the Baycorps.
He expected Baycorp shares to continue to be in demand after the listing move, which will not happen before the merger is ratified, in late November at the earliest.
Mr Foster cited Lion Nathan, which moved its primary listing to Australia last year. Its share turnover had risen in both markets. He attributed this to the company's higher profile in Australia, which had encouraged institutional and retail investors.
Yet Nufarm (formerly Fernz) was ignored by Australian institutional investors when it moved last year. Nufarm will give up its NZSE dual listing tomorrow.
Mr Foster said Nufarm was too small to make the shift successfully, but bigger companies went with his blessing.
He said a big challenge locally was reducing compliance costs for smaller companies and well-performing mid-cap stocks.
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