Forum Archive Index - February 2004

["Rockbottom" <rockbottom@ihug.co.nz>]

Hello Snoopy

You said (in brief)
> I tend to think of shares in their
> 'home market' currency.   Generally it will be the home market
> investors that drive the share price.......................
>
> If so I predict that the exchange rate volatility between each side of the
> Tasman will become less of an issue in the future for trans tasman
> share owners.


As I live in NZ I am only interested in the prices after converting them to
NZ dollars. After all I buy icecreams here.

The home market investors do drive the price to some extent. But don't
forget most of Telecom is owned overseas.
The relative exchange rates are affected by different things. ie the Oz/US
trade pact, Droughts/floods in Oz or NZ, Govt policies re balancing books.
This will lead to continuing fluctuations.

> They often say history repeats itself, but taking into account the more
> stable prospects for both TEL and TLS since the dot com boom I am
> picking that it won't.   Given current company policy for both TEL and
> TLS I see the price levels being very similar for both shares over the
> next twelve months.    In other words not much scope for traders to
> skip between the two any more.

Surely the major fluctuations are caused by the major players (who are
probably in UK or US) needing to free up money or to invest. A recent
example is Contact Energy's recent drop in share price.

Another matter is the change in the Imputation/Franking rules. I am assuming
that Telecom does not pay any tax in Aus. If so then there is unlikely to be
increased demand from Australia for their shares. Am I right?



Rockbottom (RBI:NZ)


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