7 Jun 2013

Govt may have to rethink partial sell-off plans - analyst

9:05 am on 7 June 2013

An analyst says the volatility in share prices may prompt the Government to scale back its plans for more state-owned energy company listings.

The NZX fell more than 1% on Thursday, with heavy selling by foreign shareholders, following sharp falls on major world markets. By the end of the day it had recovered to close up 2 points.

Investors have become increasingly worried that the US Federal Reserve will cut back on its economic stimulus programme, which is cited as the major reason for the recent rise in global shares.

Hamilton Hinden Greene director Grant Williamson says the New Zealand market has been due for a major correction after a long run of rises.

But he says it may mean that the Government will have to rethink its partial sell-off plans and the pricing of the new listings will have to come into play.

Mr Williamson says investors will still be interested providing the price and dividend yield are attractive.

He says the partial float of Mighty River Power last month caused a surge in trading volumes and value on the New Zealand sharemarket.

The total value of shares traded last month rose 92% to $5 billion, compared with the same month last year, while the volume of shares traded increased 29%.

The total market capitalisation rose 28% to $75 billion, or more than a third of GDP, and Mr Williamson says a large chunk of that is Mighty River's listing.