web analytics
The Standard
Advertising

Spin-bustin': new investors scared off MRP

Written By: - Date published: 8:19 am, May 10th, 2013 - 27 comments
Categories: privatisation - Tags:

The Nats’ spin is that ‘mums and dads’ were scared off investing in Mighty River Power by the Green-Labour NZ Power plan to reduce power prices but sophisticated buyers bought in. Look at the evidence: 80,000 of the 113,000 retail investors are new to the stockmarket and they boost stockmarket participation by 20%. Hence there were 400,000 existing Kiwi shareholders, and less than 10% of them bought in.

That tells me that 80,000 suckers were pulled in by the government’s multi-million dollar ad campaign while the vast majority of established shareholders knew well enough to stay away. What, in effect, we saw was a judgement by the market – that a Green-Labour government is coming, it will introduce NZ Power, and that will reduce power prices by taking away the super-profits of Mighty River and the others.

Things to watch in coming days and months:
How much has National underpriced MRP to get a positive story of a bounce on listing? Every cent of rise is nearly $7m in public money that National gave away?
How many ‘mums and dads’ are still there when we get the first annual report figures in October?
How many people will show up to a second or third electricity company float if so few showed up to the best of the bunch?

27 comments on “Spin-bustin': new investors scared off MRP”

  1. Dv 1

    AND only $25million was withdrawn after the LG announcement.

  2. Good post James. It is scary that so many investors are newbies. I suspect that between Labour’s and the Green’s plans to stop usurious power charges, Tiwai Point’s likely closure and Treaty issues about water the more canny investors decided to hold off.

    Makes you wonder about Meridian and Genesis though. Tiwai Point could turn these entities into marginal businesses at best.

  3. Pete 3

    Also bear in mind the next floats. Few non-institutional investors will invest in all of the power companies and most personal investors with any enthusiasm for the process would have blown their wad on Mighty River. Why invest in competing companies?

    • Rich the other 3.1

      Pete, don’t be silly
      The new investors will cash in on mrp and reinvest in the next offering.
      By the time they are all cashed up and enjoying a better bank balance they will be solid nat voters, brilliant.

      A Win Win situation.

      • framu 3.1.1

        nice of you to confirm its a big stinking con designed to enrich a small elite, rich – well done

      • One Anonymous Knucklehead 3.1.2

        they will be solid nat voters

        All 2.85% of them. Meanwhile, the National Party is bleeding votes from people who don’t want their property sold.

        Own goal, genius.

  4. Lanthanide 4

    “What, in effect, we saw was a judgement by the market – that a Green-Labour government is coming, it will introduce NZ Power, and that will reduce power prices by taking away the super-profits of Mighty River and the others.”

    No, now you’re just making false equivalences, just like National do when they say that everyone who voted for them wants asset sales.

    All we know is that institutional investors didn’t buy in. We don’t know *the* reason why, as you are claiming. Your given reason can also work the opposite way: some investors will think Labour/Greens won’t get into government, and so will have bought more shares because they expect the price to be lower than it otherwise would have been.

    Another reason that I think is important which may have scared off institutional investors is that MRP are projected to pay 107% of next years profits as dividends; eg they’re going to borrow in order to pay dividends. Doesn’t seem like a good move to me.

  5. ianmac 5

    On Morning Report they were saying to expect the share price to rise today from $2.50 to $2.65. As planned.

  6. Adrian 6

    Did the institutions hold off if as Carmel Fisher says the real price will be evident in a months time. What’s the bet that they’re going to pick up shares at a snip then from the newbie muppets?.

    • King Kong 6.1

      These newbie “muppets”, as you call them, at least had the smarts to accumulate enough spare cash to be able to invest in these shares in the first place. A lot more credible than some of the malingerers and beneficiary wasters on here who are giving them shit.

      When you are not clever enough to get a job maybe you should dial back the financial advice.

      • Lanthanide 6.1.1

        Anyone who bought the shares with the intent to re-sell in the short term will have to pay income tax on them.

        Be interesting to see how many of these first-time investors know that.

        • Cant remember my last username 6.1.1.1

          Theoretically yes, but in reality highly highly unlikely

          • Lightly 6.1.1.1.1

            IRD’s said that they will be watching them. wonder if govt has given IRD the deets of retail investors

      • Murray Olsen 6.1.2

        I’ve got a job. I’ve got spare cash. The only financial advice I have for anyone is to not buy stolen goods. My knuckles don’t drag on the ground.

      • Adrian 6.1.3

        I was quoting Carmel Fisher boofhead. She’s not buying for a while, and I’ll take my financial advice from her. Not some Aaron Gilmore wannabe with a third K missing.

    • mikesh 6.2

      I expect the “newbies” will hold for two years in order to obtain the bonus issue.

  7. Rich the other 7

    Happy days,

    Looks like $2.80 for mrp.

    (ps) I didn’t buy any I but enjoy seeing success.
    go the nats.

    • Lanthanide 7.1

      “(ps) I didn’t buy any I but enjoy seeing success.
      go the nats.”

      Rooting for the wrong team, then.

      • framu 7.1.1

        and just to be pedantic

        “go the (insert noun)” – has got to be one of the worst uses of the english language ive seen in a long time.

        I know it really common, but its almost text speak

        • ianmac 7.1.1.1

          How about ive (ivy?) instead of I’ve framu? :)

          • mac1 7.1.1.1.1

            ianmac, ‘Quis pedat ipsos pedantes’?

            Seriously though, the comment from Rich the other about success demands a reply as to the nature of success. At the personal level, an investor of $8000 at $2.50 a share gets 3200 shares which if they rise by 30 cents gives an immediate profit of $960.

            At the level of society, half a social asset has been sold for $1.8 billion to give tax breaks to the already rich with the effect of reducing government revenue from MRP returns of, is it, some $200 per annum which means that in nine years the loss of revenue will have equalled the sale price? Who will be affected by the loss of annual revenue but those who still pay taxes or who will lose governmental services and support?

            Not my idea of success.

          • framu 7.1.1.1.2

            ha ha – fair enough :-) (you should of seen how i first typed pedantic)

            and lets not mention the missing “‘s” from “it’s”

  8. Financially literate 8

    ‘How much has National underpriced MRP to get a positive story of a bounce on listing? Every cent of rise is nearly $7m in public money that National gave away?’

    Every cent rise increases the government’s equity. Something the left seemingly wishes to decrease at every opportunity. Short-sighted.

    • locus 8.1

      My chook lays 2 eggs a day. You can own half my chook if you pay me 100 eggs. After 200 days i’m losing out.

      But according to your logic, if somebody offers you 120 eggs for your half of the chook, that means my half of the chook is worth 120 eggs. Oh goody i now know i’ll only be losing out after….. 200 days

  9. Financially literate 9

    MRP has been sold down. It always was going to be. Get over it. 120 is better than 100 which again is better than 80. Pity the bed wetters are hell bent on talking Crown equity down for short term political gain.

    • Ross 9.1

      What did Treasury say about the deficit? That’s right, it’s expected to grow by $100 million following the loss of revenue from MRP.

Important links

Recent Comments

Recent Posts

  • English breaks his $6000 wages promise
    Just one month into the new year Bill English has already rowed back on his election promise of real wage rises for New Zealanders, says Labour’s Finance spokesperson Grant Robertson. “During the election campaign National promised Kiwis that the average… ...
    4 days ago
  • National fails to produce evidence justifying attack on RMA
    The National Government is misusing evidence provided in the Motu report on planning rules to justify gutting the environmental protections secured by the Resource Management Act (RMA), says the Green Party today. The Motu group's research into the impacts of… ...
    GreensBy Julie Anne Genter MP
    4 days ago
  • National fails to produce evidence justifying attack on RMA
    The National Government is misusing evidence provided in the Motu report on planning rules to justify gutting the environmental protections secured by the Resource Management Act (RMA), says the Green Party today. The Motu group's research into the impacts of… ...
    GreensBy Julie Anne Genter MP
    4 days ago
  • RMA changes won’t knock a dollar off the cost of a new home
    The Government’s proposed changes to the RMA won’t increase the number of affordable homes or knock a dollar off the cost of building a new house, Labour Leader Andrew Little says.  “Tinkering with the RMA will not solve National’s housing… ...
    5 days ago
  • What is the real ‘price of the club’?
    What price is too high to join a club?  According to the current the New Zealand Prime Minister, the lives of young Kiwi men and women are a part of the package. In his latest BBC interview, John Key fails… ...
    GreensBy Kennedy Graham MP
    5 days ago
  • Palestine – NZ talks loudly in New York, does little at home
    Even though New Zealand has been gently slumbering over the last few weeks, world affairs have been progressing at its usual break-neck speed. There have been a number of significant steps since we all disbanded from the last parliamentary year.… ...
    GreensBy Kennedy Graham MP
    6 days ago
  • DOC debacle means hundreds may have missed out on fishing licences
    Hundreds of families and recreational fishers may have had their holidays spoiled by missing out on their fishing licences, with Conservation Minister Maggie Barry preferring instead to focus on more high profile portfolio priorities over the summer break, Labour’s Conservation… ...
    6 days ago
  • Effective action needed against pirate fishing boats
    New Zealand’s failure to detain pirate shipping vessels poaching endangered species in our region is simply not good enough, Labour’s Defence spokesperson Phil Goff says. “We send New Zealand naval vessels to the Arabian Gulf to board pirate ships there… ...
    6 days ago
  • Housing affordability crisis gets worse under National
    News that Auckland’s housing is now among the 10 most unaffordable in the world confirms the Government’s housing policy has failed, Labour’s Housing spokesperson Phil Twyford says. “After six years in power, National’s housing policies have not fixed the housing… ...
    1 week ago
  • Rheumatic fever rates continue to soar despite millions spent on prevention...
    The Government’s $65 million spend on rheumatic fever prevention has made little impact on the alarmingly high rate of the disease among young New Zealanders, Labour’s Health spokesperson Annette King says. “Latest figures from ESR show there were 235 notified… ...
    2 weeks ago
  • Government wipes off $5 billion in tax debt
    Since coming to office, the National Government has written off $5 billion* in tax debt owed by more than a million, Labour MP Stuart Nash says. "There are two sides to the New Zealand economy under the National government: the… ...
    2 weeks ago
  • Labour adds its condemnation of Paris attack
    The Labour Party adds its voice to the international condemnation of today’s shocking attack on freedom of speech in Paris, Leader Andrew Little says. “The attack on the Charlie Hebdo newspaper is an assault on democracy and freedom of expression.… ...
    3 weeks ago
  • Petrol retailers and importers must pass on savings
    New Zealand’s petrol retailers and importers must start passing on savings to Kiwis motorists following the dramatic drop in the price of crude oil, Labour’s Energy Spokesman Stuart Nash says. “It is great news for Kiwi drivers that the price… ...
    3 weeks ago
  • Foreign investors must uphold their promises
    The Government must ensure foreign investors uphold their commitment to add value to sensitive New Zealand assets* they purchase, after new figures show National has declined just 1.5 per cent of all applications, Labour’s Land Information spokesperson Stuart Nash says. … ...
    3 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere