NZ stocks: Action under the surface say brokers

By ELLEN READ markets writer

Don't be fooled by the lack of scheduled events on the equity calendar this week; brokers say there are plenty of issues bubbling away that could boil over at any time.

Montana, CNI forests, Tranz Rail, Infratil - they have made the headlines recently and are expected to continue to do so.

"There's a lot of behind-the-scenes stuff, but it's too hard to predict whether things will actually happen this week or not," one broker said.

Top of the possibilities is the future of the Central North Island Forestry Partnership.

Carter Holt has Commerce Commission approval to buy the CNI forests, and despite statements that it has no plan to do so, speculation has it in a three-way bid with Fletcher Forests.

A statement about the sale timeline is expected from the CNI receiver within two weeks.

The Lion Nathan/Allied Domecq/Montana soap opera will continue, but brokers - amazed at the twists and turns so far - are unwilling to pick the next storyline. Backroom manoeuvring will go on, but firm action is likely to remain on hold.

"I don't think we're going to see anything fresh [this] week. It is possible, but under the current takeover proposal, the action will start again in about two weeks," one broker said.

Infratil will be closely watched. The company's share price rose last week as Alliant, Infratil and AGL haggled for control of energy retailer TrustPower.

According to a broker, rumours range from Alliant buying TrustPower to Infratil making a whole bid for it.

"I just can't see that, I think it's more likely they're a seller," he said.

Similarly, no announcements are expected this week regarding Tranz Rail's future, but things are definitely happening behind the scenes regarding discussions with the Government and negotiations with Western Rail over a final price.

Nothing on the local economic front - which this week includes the release of May retail trade and overseas merchandise trade data - is likely to force the market into action.

July is traditionally a quiet month for market events during the run-up to the mid-August start of the reporting season. Added to this is a dearth of corporate activity after action was pushed forward to beat the July 1 implementation of the takeovers code.

The NZSE-40 capital index ended last week at 2047.02, down from 2086.05 the previous Friday.