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Aussie punters flock to Telecom

By Nick Stride

Friday 11th July 2003

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Australian ownership of Telecom shares is climbing and could receive a further boost from a Macquarie Equities research report.

Macquarie this week issued its Telecom Switch update on the relative valuations and performances of Telecom and Australian incumbent Telstra.

The report said Telecom was marginally ahead, having better earnings prospects and more favourable price targets.

Australian institutional investors now own about 16% of Telecom, up from 7% a year ago.

Telecom's rising share price has contributed to the solid recent performance of the NZSE50 index, which rose about 13% in the June quarter.

A survey by sharebroker JB Were found foreign ownership of the New Zealand equity market was at 45.4% in the first quarter of 2003, down from 47.1% in the last quarter of 2001.

But the broker attributed the decline changes in market weighting rather than investment flows.

Foreign ownership had in fact been stable at 45% to 47% despite some large transactions such as US telco Verizon's sale of a 20% Telecom stake, the exit of Tranz Rail's three major shareholders last year, the sale of a 12.5% stake in Auckland International Airport by the Auckland City Council and Palo Alto's sale of 10% of DB Breweries.

JB Were estimated foreign and local fund managers now owned 43% of the market, up from 40% at the last survey.

Retail investors owned 25%, up from 23%, while foreign strategic ownership had fallen to 20%, down from 25%.

Strategic stakes owned by foreign managed funds were at 4.7%.

JB Were said sales by strategic investors, mostly to managed funds had been positive for liquidity.

Since the Verizon sale of Telecom, for example, turnover in the shares had risen 50%.

But it warned against "blindly welcoming" the departure of strategic shareholders, who added industry expertise and confidence.

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