Of Bulls & Bears

Friday 16th June 2000

Stock exchange merger close

The Stock Exchange has announced it is discussing a potential merger with a number of international exchanges but won't say any more. Few would believe Australia isn't high on the list and, in this case, the Australians seem to know more about what's going on than we do. According to the Australian Financial Review, the New Zealand exchange has gone beyond "if" and is discussing "when" a merger with the ASX should go ahead. "In the last six years an exodus of top stocks from New Zealand, such as Lion Nathan to Sydney and Brierley Investments to Singapore, has sapped the New Zealand Stock Exchange so much that it has offered merger terms to ASX Ltd, which is yet to respond, weeks after the proposal," the AFR said. Ferdinand looks forward to hearing more, preferably from the local exchange first. There is a large body of opinion in this country that a merger with Australia would be the saviour of New Zealand investors. But it may not be long before the ASX also becomes a backwater. Major exchanges around the world are discussing a super, global, 24-hour market.

Buyer hopes for paper profit

Fletcher Paper may appear to be all but taken over by Norwegian company Norske Skog but some people seem to think otherwise. Documents relating to the bid, including a favourable independent report by investment banker Grant Samuel, went out to shareholders last week and investors are due to meet on July 4 to vote on the deal. Despite this delay, or perhaps because of it, there has been considerable trading in the shares. They have been the most actively traded of any security on the market in the past week with several million on average changing hands each day. However, the price is staying stable at around $2.40 compared with Norske Skog's offer of $2.50. One buyer has been Australian investment company Hopkins Partners Funds Management which has announced it owns 5.1% of Fletcher Paper. Hopkins either thinks the takeover won't get the nod - or that Norske Skog might offer a higher price to buy this significant parcel on its way to getting to the critical 90% acceptance level.

Pay more, get less

A slump in the price of Capital Properties' instalment receipts (down nearly 50% since floating in late 1998) has brought the property investor and manager the dubious distinction of being the highest yielding security in the market. If past dividend payments per share are maintained, investors can expect a yield of more than 18%, beating long-time leader Newmarket Property Trust. However, the yield will be at least halved when second instalments are paid. Receipt holders soon have to cough up another 50-57c per receipt, depending on when they paid their first instalment. Payment is due by June 30 and Ferdinand thinks the chance of a rebound in price on the receipts before then is extremely thin.

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