To list on ASX or not?

Kate Chapman reports:

An announcement will be made this afternoon after the Cabinet makes its final decisions.

One of those will be whether to dual-list stock on the New Zealand and Australian stock exchanges, as indicated by an Australian media report on Friday.

To do so would fly in the face of the Government’s promise that Kiwi mum-and-dad investors would be at the front of the queue.

It won’t, but it may be perceived as doing so. In reality dual listing is unlikely to greatly change the proportion purchased by New Zealanders. The impact is more likely to be on price.

Business commentator said the Government faced a dilemma.

“On the one hand it wants to get the best price it can for the shares, but in terms of stimulating demand, it’s going to run into political flak.”

Australians can buy shares on the NZX, but listing In Australia would make it easier and increase demand.

Rod Oram is correct. Dual listing will increase the price, but also that Australians can buy shares directly on the NZX also.

I own a number of shares that are listed on the ASX only – and I’m not Australian.

It would also create demand from institutional investors that did not trade in New Zealand.

That would drive up the price and ensure the Government got the maximum benefit from the sale, Mr Oram said.

“The counter of that is, in doing that, they would be guaranteed to increase the foreign proportion of shares held in the company.”

There would be some impact, but the Government’s allocation model will be the prime factor. They are very focused on over 80% being NZ owned.

Dual-listing would also seem to fly in the face of the Government’s argument that the would boost domestic capital markets.

“Listing in Australia does somewhat undercut that,” Mr Oram said.

A fair point.

Labour MP Clayton Cosgrove said the four state-owned energy companies that the Government planned to sell down would inevitably end up in foreign ownership.

A stupid point. This is literally impossible under the law passed by Parliament.

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