Professional investors, while still nervous of the proposal, have begun to question whether it will be implemented, even if the Opposition wins next year’s election.
AMP Capital’s head of equities, Guy Elliffe, estimates it will take at least five years to design and implement the plan, exposing it to the same policy about-face that has National so concerned.
“Most people think it is [going to take] more than one electoral term … but then what is the probability of a Labour-Green coalition being elected twice?” he asked.
Mr Moghe, meanwhile, has maintained his recommendation that investors subscribe to the share offer, which closes on May 3 for retail investors.
I think Mr Elliffe is largely correct.
To implement this policy, first Labour and Greens need to get 61 seats between them. If they have to rely on NZ First, he may not support the policy.
Secondly implementing the policy would be massively complex, probably the subject of huge litigation, and take years to do. It is most unlikely to be done in one term. And with Green/Labour policy veering radically leftwards (printing money, nationalising industries) the economy could be seriously tanking after three years.
But also look at who the Labour and Green energy spokespersons are, who would be the ones to implement this incredibly complex and controversial policy – Moana Mackey and Gareth Hughes. Now I like Moana and Gareth, but a policy like this would need a Michael Cullen or Steven Joyce to implement.
So I think the chances of this policy ever being implemented are in fact quite low.
Hence why I am increasing the amount of Mighty River Power shares I was planning to purchase. Thanks to Greens and Labour, they are likely to be priced more towards the bottom end of the indicated range. This means I’ll pick up the shares for a discount. This is of course bad for the taxpayer, but good for me as an investor. Thanks Russell and Davids.
Feel free to comment below if you are pre-registered and if you still plan to invest.
Note that this blog post is not financial advice.Tags: Asset Sales, Mighty River Power, nationalisation