Tuesday 16th July 2013
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The market has continued to react to the words of the World’s central bankers and politicians. There is still a very tight focus on Ben Bernanke. This is very unhealthy, as Central Bankers should be concerned about controlling the money supply NOT running the World’s economies. The other aspects of Central Government that affect Commerce and have a greater impact (e.g. Treasury, Tax Policies, Trade Policies, Tariffs, Labour Policies, etc.) are far more important.
Central Banks can only really turn the money supply taps on or off, adjust interest rates and bail out Banks from time to time. They simply cannot fix all the other imbalances in the economies.
Closer to home we have another issue that all investors should be thinking about - the Government’s privatisations !
There are two very important points here:
The National led Government is determined to partially sell Meridian and
list the shares on NZX. This is a bigger offer than Mighty River Power.
The Labour and Greens Parties have given notice of their intended policy, if elected, which will have an effect on the profitability in the sector.
I am sure they will be more organized this time around and the policy will have a greater effect.
My view on the results of the above will be:
Action to take now
Have a look at your investments and see which of these could be affected by the Meridian offer.
If you are a seller, probably the earlier you do it the better. Do it now before the PR machines get moving and the market gets spooked.
Talk to your advisor about any shares (or Bonds) that could be vulnerable and look to exit at best price whilst you have time.
Brent King is the Managing Director of King Capital & Investment Corporation Ltd and its subsidiaries, Equity Investment Advisors Ltd and MoneyOnline Ltd.
This article is of a general nature and is based on market conditions and information available at the time of writing.
ALL investors are encouraged to speak to their advisors to obtain advice specific to their own position.
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