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?