NZX listings ‘worth serious consideration’, AMP Capital says 26 Oct 2011
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NZX listings ‘well worth serious consideration’, AMP Capital says
By Paul McBeth
Oct. 26 (BusinessDesk) – The rush of new listings to the New Zealand stock exchange are “well worth serious consideration” amid a time of great global uncertainty, according to AMP Capital Investors NZ, one of the country’s biggest fund managers.
AMP Capital, which oversees some $12 billion in New Zealand assets, is looking forward to a raft of new listings on the NZX, including retirement village operators Summerset and Vision Senior Living, online auction site Trade Me, and the government-owned electricity generators Genesis Energy, Meridian Energy, Mighty River Power and coal miner Solid Energy.
“It just looks like a very attractive range of opportunities to us,” head of equities Guy Elliffe told a media briefing in Wellington. “We regard most of the companies... as well worth serious consideration.”
The government wants to raise as much as $7 billion from selling down minority stakes in the energy companies and airline Air New Zealand, while Australia’s Quadrant Private Equity is looking to raise $123.6 million for a 30 percent stake in Summerset and Fairfax Media will reportedly raise $300 million from a partial sale of Trade Me.
“To have some new large exciting liquid listings is only positive from our perspective,” Elliffe said, referring to the SOE floats. “I think it’s great. It just means the capital markets are open and functioning.”
Risks from Europe mean fixed interest assets are more attractive for investors, and bond yields have stayed low throughout the heightened volatility.
Though AMP Capital’s own funds are fully-mandated, head of fixed interest Grant Hassell said he expects retail investors with cash in bank term deposits will mop up shares.
AMP Capital chief economist Bevan Graham said that means New Zealand stocks are cheaper than local bonds, though still more expensive than global equities.
He says New Zealand is in relatively good shape compared to other developed nations due to its increased reliance on Asian trading partners and the increased demand for food-based commodities.
New Zealand’s monetary policy is still very stimulatory, and Graham said he doesn’t expect Reserve Bank Governor Alan Bollard to start hiking interest rates until next year.
Bollard will review the official cash rate tomorrow, and is expected to keep it on hold at 2.5 percent. Traders are betting Bollard will lift the OCR by 32 basis points over the coming year, according to the Overnight Index Swap curve.
AMP Capital’s funds were mainly neutral, with small underweight positions in Australasian equities and commodities, and small overweight positions in cash and currency.
It made a 3.1 percent average quarterly loss on local equities, and a 10.1 percent loss on unhedged global stocks. Its hedged stocks made a quarterly loss of 16.7 percent, and Australian equities made a loss of 13.7 percent.
Property reported a 1.1 percent quarterly gain, while global property made a loss of 18.3 percent in the quarter.
New Zealand fixed interest made a return of 3.5 percent in the three months ended Sept. 30, while global fixed interest reported a gain of 4.6 percent. Cash made a 0.9 percent return in the quarter.
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