By Michele Simpson
Friday 20th October 2000 |
Text too small? |
Selling a stock and then buying it back at a lower price - short-selling - is relatively unheard of here but has recently started attracting more investors, especially those scalping Telecom and Fletcher Forests stocks.
Fletcher Forests has been as high as $1.30 but sank to about 38c after the Commerce Commission knocked back Shell's bid to buy Fletcher Energy.
Telecom, which used to account for a third of the value of the Stock Exchange, has also been on a steady beat downward since May when the share price was over $8.50 - it has since dipped to $5.30.
The Stock Exchange recently opened up short-selling to all traded stocks rather than just limiting it to those in the NZSE40, which has dropped 13.9% since January.
In Australia, the US and the UK short-selling is a well-known practice. Overseas there has been a frenzy of short-selling with technology stocks.
Ord Minnett manager of security lending Tony Vincent said short-selling might provide much needed liquidity for the Stock Exchange - a reason given by offshore investors for not putting money in New Zealand stocks.
Not many broking firms here offer short-selling to their clients because they have to be big enough and carry enough capital to buy the stocks first.
Clients who want to short-sell have to pay a 20% deposit to the broker first.
But the process of short-selling is still considered easier than buying an option on the New Zealand Futures and Options Exchange.
"Short-selling is definitely gaining momentum and I am sure more brokers will start offering the service," Mr Vincent said.
Simon Allen, chairman of the New Zealand Stock Exchange said short-selling had not been popular for brokers because of the tax implications.
No comments yet
August 25th Morning Report
Skellerup achieves another record result
August 21st Morning Report
Me Today signals capital raise and provides trading update
Seeka Announces Interim Result and Updates Guidance
FBU - Fletcher Building announces FY25 Results
August 20th Morning Report
RUA - New Zealand grown products support Rua's global strategy
Devon Funds Morning Note - 19 August 2025
Seeka Announces 15 cent Dividend