Taking Stock: A Different Sport – 3 September 2026

James Lee writes:

“I am not trying to win this game. We are trying to play a different sport.”

I was in my mid-twenties and had just given another speech at a black-tie event thanking everyone for an award my firm had won. It meant a lot to us at the time.

Afterwards, a competitor came over, congratulated me and suggested that perhaps we had proven our point. We had built something successful, people had noticed and maybe it was time to slow down.

I was young, a bit idealistic and probably a touch arrogant when I replied: “I am not trying to win this game. We are trying to play a different sport.”

The point I was trying to make, perhaps inelegantly, was that we weren’t trying to build a slightly better version of everyone else. We were trying to do something fundamentally different. And for many years, we did.

At our peak, my team at times traded around 50 percent of the volume on the NZX. We became sufficiently disruptive that a few people around the market suggested perhaps we should be regulated differently to even the playing field, to which my equally diplomatic response was that you couldn’t regulate us for being better.

Yes, I accept that the line between confidence and arrogance can become somewhat blurred in your twenties. More than 20 years later, my perspective is different, but I find myself thinking about that conversation surprisingly often.

Today I run a listed Canadian healthcare technology company trying to enable preventative healthcare, providing services through our customers that touch around 150 million lives globally. It means I spend probably too much of my life travelling between investors and customers across North America, Europe, the Middle East, Asia and Australasia.

I got back recently from Dallas to find a new Chair of the FMA, a new CEO of the NZX, politics already shifting towards the next election and, thankfully, an All Blacks victory.

And I found myself asking a slightly uncomfortable question - Why are we so determined to become more like everyone else?

Winning what?

Spend enough time moving between developed countries and the similarities become more striking than the differences.

The politicians sound different, have different accents, and the institutions have different names, but increasingly the economic game being played is similar: grow GDP, increase productivity, build bigger companies, follow the popular narratives and borrow money to pay for it.

Capital markets increasingly look the same as well. Almost everywhere I travel people worry there aren’t enough IPOs, small companies don’t get enough coverage and increasingly large amounts of capital are concentrated in a relatively small number of enormous companies.

And to be fair, much of the conventional game has worked. As you know, I believe it is less likely to work over the next 20 years, but we have covered that before.

The world of 2025 was vastly richer than the world of 1995, technology transformed our lives and companies became enormously more productive.

But perhaps the interesting question isn’t whether we won. It’s what we won.

Accumulation or creation?

Imagine standing in New Zealand in 1995 and being shown the world 30 years later. A computer containing access to almost all human knowledge sits in virtually everyone’s pocket, we can communicate with anyone in the world almost instantly and artificial intelligence can increasingly perform work that once required highly-trained people.

New Zealand is considerably richer, household assets are worth vastly more and KiwiSaver has created an enormous pool of long-term investment capital that barely existed 30 years ago. On most conventional economic scoreboards, we have made enormous progress.

But if we look at another number, New Zealand’s home-ownership rate was around 74 per cent in 1991. By 2023 it was around 66 per cent.

Over roughly the same period New Zealand became richer, our houses became enormously more valuable and household wealth increased substantially. If I owned three Auckland houses in 1995, the past 30 years have been extraordinary. If I was born around then and am trying to buy my first house today, I might reasonably ask what exactly all that economic progress was for.

Both people live in the same economy, but their experience of its success could hardly be more different.

Perhaps the problem isn’t capitalism, growth or markets. Perhaps it is that we have become better at measuring accumulation than creation.

A house becoming twice as expensive makes its owner wealthier, but it doesn’t house twice as many people. Two companies combining and removing duplicated costs can create efficiency, but they don’t necessarily create a new service. An economy can become larger without necessarily creating proportionately more opportunity for the people living in it.

This isn’t really an argument about inequality. I have no particular problem with extraordinary rewards following extraordinary creation. The question that interests me is whether wealth is being created by making something new, or accumulated because something scarce simply became more expensive.

Perhaps we should ask a different question: What did we actually create?

Bigger is better

One of the most accepted ideas in business is that bigger is better. Scale creates efficiencies, mergers remove duplicated costs and larger companies can spread investment across more customers.

It sounds almost self-evident.

British banking gives us an interesting 30-year experiment. Go back to the early 1990s. Lloyds, TSB, Halifax and Bank of Scotland were four substantial financial institutions. Collectively they employed around 125,000 people and, adjusted to today’s money, generated roughly £6 billion of annual profit.

Then the consolidation began. Lloyds combined with TSB, Halifax combined with Bank of Scotland, and eventually Lloyds acquired the resulting HBOS. Four institutions progressively became one. Systems were combined, branches closed, duplicated functions disappeared and tens of thousands of positions were removed.

Today Lloyds Banking Group has close to £1 trillion of assets, employs around 60,000 people and generates approximately £6.7 billion of pre-tax profit.

If we think about it, we have had 30 years of consolidation, enormous technological change, dramatically more assets and roughly half the employees, yet in real terms the institution earns only around 10 per cent more than the four banks it ultimately replaced were collectively earning in the early 1990s.

That is an extraordinary achievement in efficiency but, to my mind, they sacked 60,000 people and removed innovation and competition to earn 10 percent more.

So is it an extraordinary achievement in value creation?

Then someone played a different sport. In 2015, Nikolay Storonsky and Vlad Yatsenko started Revolut. They didn’t merge two banks, inherit millions of customers or begin with hundreds of billions of pounds of assets.

They started with essentially nothing.

Ten years later Revolut has more than 68 million retail customers, and generates around £4.5 billion of revenue and £1.7 billion of pre-tax profit.

It took Lloyds 30 years of consolidation to produce around 10 per cent more real annual profit than the institutions it replaced. Revolut took 10 years to go from nothing to £1.7 billion of annual profit.

But the more interesting comparison is value.

Lloyds today is worth around £60 billion. Revolut, a company that did not exist until 2015, has been valued in private transactions at more than $100 billion.

They are not directly comparable valuations. Lloyds trades every day in public markets while Revolut’s valuation has been established through private transactions, and the businesses have different risk profiles, histories and capital structures.

But that does not make the comparison irrelevant. In some ways, it makes it more interesting.

In 30 years Lloyds became dramatically more efficient at something that already existed. In 10 years Revolut created something that didn’t.

And measured by the value investors are prepared to place on those businesses today, Revolut created materially more value in its first decade than 30 years of consolidation created at Lloyds.

Perhaps scale doesn’t create value. Creation does. Scale follows.

What did you create?

Whether it’s Heartland acquiring TSB, Xero acquiring Melio, Fonterra selling Mainland or Contact acquiring Manawa, there are plenty of examples of large-scale mergers and acquisitions (M&A) around New Zealand.

M&A isn’t inherently good or bad. I spent much of my career around transactions and there are acquisitions I would happily make tomorrow. But I increasingly distinguish between three reasons for doing them, which are scale, capital efficiency and capability.

M&A for scale makes me suspicious. Combine two companies, remove duplicated costs and apply a higher margin to the larger revenue base, and almost any investment banker can produce a beautiful synergy slide.

Getting bigger isn’t a strategy. M&A for capital efficiency can create genuine value. If two businesses can operate with less capital, fewer duplicated systems and lower costs, shareholders should benefit, but only if the capital released is subsequently returned to them or reinvested at attractive returns. If it simply finances the next acquisition, eventually capital efficiency becomes another name for empire building.

M&A for capability interests me much more. If one company has customers but lacks a product, another owns distribution but lacks technology, or something developed successfully in one geography can be taken around the world by another business, the combination can create something neither company could create independently.

The question isn’t simply whether the acquisition is accretive. What can the combined company do tomorrow that neither could do yesterday?

The same principle applies beyond M&A.

I still care enormously about revenue, margins, return on capital and valuation, but today I want to understand something more fundamental: did this business become more valuable because it captured more of what already existed, or because it created something customers didn’t previously have?

That is the distinction. Accumulation makes something bigger. Creation makes something new.

A different scoreboard

Perhaps New Zealand should think about itself in much the same way.

For 30 years we have become extraordinarily good at measuring GDP, productivity and asset values, and because we can measure them precisely we have gradually started treating them as objectives rather than tools for achieving something else.

GDP should matter because without growth it is very hard to improve people’s lives, productivity because it allows us to do more with less, wealth creation because it gives people greater security, freedom and opportunity.

They are means, not ends.

Imagine instead that once a year the Prime Minister had to stand in front of the country with five numbers.

Housing affordability: how many years of normal household income does it take to buy a normal home?

Employment: are we creating productive jobs and are real incomes from that work increasing?

Healthspan: are New Zealanders living longer, healthy and independent lives?

Economic growth: is real GDP per person increasing?

And economic mobility: can someone born without wealth realistically create it?

If housing became less affordable, real wages fell and economic mobility deteriorated, I’m not sure I would call it a successful year simply because headline GDP increased. There would be trade-offs. That’s the point.

At least we would know what game we were trying to win.

What are you rebuilding?

Which brings me to the NZX.

A new CEO taking over New Zealand’s stock exchange has one of those rare opportunities in business where the first few months genuinely matter. There will inevitably be a first 100 days strategy, a five-year vision, meetings with brokers, fund managers, listed companies and government, and at some point probably a presentation to investors explaining why this time it is going to be different.

My advice would be to start before all of that with a much simpler question: What exactly are you trying to rebuild, and why?

Because the answer cannot simply be the NZX we used to have. If the objective is to recreate an exchange with more IPOs, more research coverage and more small-cap liquidity, then we are trying to rebuild a better version of the old game.

I’m not sure that game still exists.

The danger for the NZX is that it spends the next five years doing what Lloyds spent 30 years doing: becoming progressively better at operating a structure inherited from another era.

The opportunity is to do what Revolut did - start with the problem rather than the institution.

The world around the NZX has fundamentally changed. KiwiSaver has created an enormous pool of long-term savings, many of New Zealand’s most interesting companies are choosing to remain private for longer, global markets are available from a phone and technology has dramatically reduced the importance of the physical marketplace that exchanges once controlled.

New Zealand has capital and New Zealand creates genuinely world-class companies. But remarkably often the two meet somewhere else.

The successful company raises offshore, lists offshore or sells to an offshore buyer. The New Zealand saver increasingly invests offshore through KiwiSaver or an index fund.

Both decisions can be completely rational individually while collectively producing an outcome we should at least question.

So perhaps the ambition shouldn’t be to rebuild the New Zealand stock exchange. Perhaps it should be to build New Zealand’s capital exchange. The distinction matters.

Its purpose would no longer simply be maximising the number of companies carrying an NZX ticker or the value of shares traded each day. It would be connecting New Zealand savings with New Zealand creation.

That might mean traditional listed companies, but it could also mean growth companies raising their first institutional capital, private companies providing partial liquidity to founders and employees, credible secondary markets for private assets, better access for KiwiSaver funds to New Zealand growth companies, and pathways allowing businesses to move progressively from private towards public ownership rather than treating an IPO as a single enormous leap.

And the scoreboard would change with it.

How many growing New Zealand companies did the NZX help finance? How many New Zealanders gained access to the wealth those companies created? How many businesses were able to remain here because they could find the capital required to keep building?

Because capital follows the scoreboard.

What investors choose to reward affects what companies choose to build, what boards choose to prioritise and where entrepreneurs direct their energy. If public capital increasingly rewards scale, liquidity and predictability while genuine creation remains private for longer, public-market investors risk increasingly being offered one particular part of capitalism: the efficient incumbents rather than the creators.

That is why the opportunity facing the NZX is bigger than rebuilding a stock exchange. New Zealand does not need an institution extraordinarily good at financing yesterday’s winners.

It needs one capable of helping finance tomorrow’s.

Perhaps a successful exchange shouldn’t ultimately be judged by how much stock it trades. It should be judged by how much creation it finances.

If I were writing that first 100 days strategy, that is where I would start - not with how to rebuild the old exchange. With what we would build if we were starting again today.

A different sport

Which brings me back to that black-tie dinner more than 20 years ago.

My competitor wasn’t wrong. He was playing the game extremely well. We simply weren’t particularly interested in playing the same game.

Today I spend much of my life in countries that, by conventional measures, are winning. There is an enormous amount New Zealand should learn from them.

But I also see remarkably similar problems — unaffordable housing, enormous government debt and younger generations questioning whether the system works as well for them as it did for their parents.

Perhaps that should tell us something.

For 30 years New Zealand has asked how we become more productive, how we build bigger companies and how we increase GDP.

The NZX has asked its own versions of those questions: how do we attract more listings, increase liquidity and get more capital flowing through the market?

They are important questions. But they are questions about how to win. There is a question that comes before them: Winning what?

The NZX is unlikely to beat the Nasdaq at being the Nasdaq, or the ASX at being the ASX. So when the new CEO sits down to write that first 100-day strategy, perhaps the first question shouldn’t be how to get more listings, increase liquidity or rebuild the exchange we once had. It should be simpler.

What are we trying to build, and what are we trying to build it for?

More than 20 years ago, I told a competitor that I wasn’t trying to win his game. We were trying to play a different sport.

New Zealand might want to consider doing the same. Because before we decide how to win, we should probably decide what winning means.

Christchurch & Auckland Seminars

Following our recent investor seminar at Southward Car Museum in Paraparaumu, we are pleased to confirm that we will be holding our last two seminars in Christchurch and Auckland.

The seminars are open to both existing clients and other investors.

The Christchurch seminar will be held at Burnside Bowling Club at 11:00am on Thursday, 17 September.

The Auckland seminar will be held at Fairway Events Centre, North Shore, at 11:00am on Wednesday, 23 September.

We will discuss the current investment environment, recent developments across New Zealand and international markets, risk management, and some of the companies and sectors we are currently watching closely.

If you would like to attend either of these seminars, please contact us by email to reserve a seat.

Bond issues

BNZ Bank is expected to open a new senior note shortly. We expect the offer to have an interest rate of approximately 4.75% per annum. Please note that BNZ will not be paying the transaction costs for this offer. Accordingly, brokerage will be charged.

Metlifecare may open a new senior secured bond in late September. We expect the bond to have a term of between 5 and 7 years, with an interest rate of at least 5.50% per annum.

Contact Energy is expected to issue a new subordinated capital bond in October. We expect the bond to have a term of around 6 years, with an interest rate of at least 5.50% per annum.

Investors who may be interested in these potential bonds are welcome to contact us with their CSN and an indication of the amount they may wish to invest. We will then contact them once the final terms and further details are available.

Travel

Our advisors have an extensive travel schedule coming up over the next quarter, including the following dates:

8 September – Ellerslie, Auckland – Edward Lee

9 September – Albany, Auckland – Edward Lee

16 September – Christchurch – Chris Lee

18 September - Christchurch (AM only) – Chris Lee

22 September – Lower Hutt – David & Gavin

24 September – Ellerslie, Auckland – Chris Lee

25 September – Ellerslie, Auckland (AM only) – Chris Lee

25 September – Palmerston North – David & Gavin

5 October – Napier (Havelock North) – Edward Lee

5 October – Nelson – Chris Lee

6 October – Napier (Mission Estate) – Edward Lee

6 October – Blenheim – Chris Lee

9 October – Wellington – Gavin Parkes

21 October – Auckland (Albany) – Edward Lee

22 October – Auckland (Ellerslie) – Edward Lee

On top of these areas, we will also visit Christchurch, Wellington and Lower Hutt in November. Dates to be confirmed.

Please contact us if you would like us to visit your area or would like an appointment.

James Lee

Chris Lee & Partners Limited