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Mighty River Power decision puts NZX on a high

The NZX closed yesterday at a five-year high after news Mighty River Power will be partially sold.

NZX says the Supreme Court’s decision not to allow the Maori Council’s appeal has stoked optimism for new NZX listings.

The NZX 50 rose 37.40 points, or 0.9%, to 4276.31, the highest close since October 2007.

Within the index, 31 stocks rose, 12 fell and seven were unchanged.

ASB chief economist Nick Tuffley told NBR ONLINE yesterday’s decision now provides more clarity and certainty over when the company will come to market, which is positive for the stock exchange.

However, he says the markets have also been influenced by global factors and a slight recovery in Italian equities will have helped the result.

Prime Minister John Key says the new listing will provide more investment opportunities for smaller investors in Kiwisaver schemes.

“New Zealanders are everyday putting money into their Kiwisaver accounts – they need investments.”

He is confident the transfer of Mighty River Power to a mixed-ownership model company will be subject to greater oversights than if it remained a state-owned enterprise.

“If you had the things which will occur under mixed ownership like continuous disclosure, external directors and external analysis, Solid Energy may have performed better,” Mr Key says.

Solid Energy, whose chief executive Don Elder quit this month, is in talks with its banks after announcing it is carrying $389 million of debt and is heading for a "significant" first-half loss.

bcunningham@nbr.co.nz

More by Blair Cunningham

Comments and questions
3

You can spin however you like, but the reality is any interest sold to overseas interests will just increase NZ Inc's already hugh deficit of income leaving our shores in engineered dividend payments, consultancy fees and less than transparent tax manipulation.

It's a lie this share float will provide an investment for every New Zealander, through KiwiSaver. Those on the minimum wage (and there are plenty of them), opt out of KiwiSaver because they need the money to cover day-to-day living costs. I know because employ at least 10 in this situation.

This is plainly a wealth transfer by John Key, the National and ACT Party to vested interests. I will have to buy some shares so that overseas interests have less, but that is not guaranteed. Those running it (who don't necessarily represent the interests of NZ Inc) have preferential buyers.

Wait till it has been sold but then all Mighty River Power customers who are against privatisation should move over to another power company.

another bubble on the way