Wednesday 23rd November 2011
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Chorus, the telecommunications network operator spun off from Telecom, increased 4.5 percent in its NZX debut though investors said the gains may be limited because the divided company will fall out of major global investment indices.
The shares rose to $3.07 from the $2.94 listing price on the NZX, two days after listing on the ASX, where they shed 1.7 percent yesterday to A$2.26. The Australian listing came first due to listing rules across the Tasman, and operated on a deferred settlement basis.
Chorus shares may be heavily traded over the next few weeks as institutions with funds weighted to benchmark indexes exit their holding. Telecom shareholders received one Chorus share for every five they held in the phone company.
“There’s likely to be a lot of volume coming out in the next few weeks with regard to it being removed from offshore indices,” said James Lindsay, equities manager at Tyndall Investment Management. “It’s come in relatively in line” with expectations, he said.
Chorus will be formally carved out of Telecom at the end of the month, ending the culmination of an 18 month process for the phone company to shed its regulatory burden of operating a network monopoly in exchange for a government subsidy to build the backbone to a nationwide broadband network.
Lindsay said the early ASX listing probably didn’t offer many opportunities for any arbitrage, with the deferred settlement well anticipated and today’s listing price in line with trading in Australia.
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