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Of Bulls & Bears

Friday 29th September 2000

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Is kiwi too strong for investors?

Thanks to the low New Zealand dollar, our shares are said to be in the global bargain basement (again). Lately there have been rumours of foreign investors building up billions of dollars in currency options to give themselves the room to make a takeover bid or two. This is all very well but Ferdinand has not seen any evidence that local or international investors are piling into the market. Volumes have been light, the NZSE40 index is struggling to keep its head above the 2000 mark (again) and the price of our flagship company, Telecom, is showing little willingness to halt its precipitous slide. The good news is most investors appear content to hold tight for now. The bad news is the lack of activity from foreign investors can only mean one thing - they expect the kiwi to go even lower.

Odd Capital similarities

Both Southern Capital and IT Capital are investment companies prepared to take plenty of risks in the chase for big profits. Both have reported net losses in the past year, with Southern reporting a $1.4 million loss for the year to June 30 and IT Capital a loss of $2.5 million to March 31. Last month, IT Capital sold its stake in exo-net International to Australia's Solution 6 Holdings for about $12.7 million compared with an investment of $1.5 million. Southern has done even better with a stake in biotech company A2 corporation worth about $2.9 million compared with a $39,000 investment just six months ago. One significant difference between the two is in their share price performance. IT Capital has lost half its market value in the past six months while Southern Capital has nearly doubled.

Nerves jangle at Aquaria

Investors in failed aquarium company Aquaria 21 have seen their shares fall in value from 21c in February to just 2.7c now, a paper loss of 87%. Yet, despite this destruction in wealth, the company's major backers such as enterpreneur Eric Watson are holding on to their shares. Of the top 10 investors in the company, only one - the Aquaria 21 Trustee Co - has reduced its stake in recent months. Other shareholders have been less reticent, however. One notable investor, a company associated with Metlifecare founder Clifford Cook, has sold 78% of its 4.7 million share stake since May, presumably at a fantastic loss. It remains to be seen whether the holders or the sellers in this company are the smarter investors.

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