<i>NZ stocks:</i> Index changes and AGM keep spotlight on Telecom

6 Oct, 2002 08:35 AM2 mins to read

By SIMON HENDERY

Market heavyweight Telecom is likely to be the centre of investors' attention this week.

The stock has been on a price rollercoaster since United States shareholder Verizon sold its cornerstone stake in the company 11 days ago.

Since then the share price has wavered between a low of $4.63 and a high of $5.08.

Last week's announcement by the Stock Exchange of planned index changes generated further interest in Telecom.

Under the plan to convert the NZSE-40 to a free-float top 50, Telecom's weighting would jump from about 22 per cent to 26 per cent.

Direct Broking retail manager Brett Wilkinson said of Telecom: "The positive is that the stock's been freed up and we have a free float. Index funds will have to re-weight, so there is a bit of institutional buying and interest.

"The converse is that it must be very tempting for holders in the Verizon share placement [who paid $4.50 a share] to take a profit."

The company will remain in the spotlight on Thursday, the date of its annual meeting, which promises to be lively.

Advocates from the Shareholders Association have promised to turn out in force and give the company a grilling over several aspects of directors' remuneration.

The following day, Lyttelton Port's annual meeting in Christchurch is likely to be a sombre affair after last week's announcement from P&O Nedlloyd that its weekly "supership" container service to Europe would stop only in Auckland, Napier and Dunedin, leading to an expected 10 per cent drop in Lyttelton's container business.

From today, shares in Sky City Leisure (formerly Force Corporation) have been consolidated 25 to 1.

"Our research shows that in general with a consolidation you get a bit of a fall-off in share price until earnings begin to come through and fundamentals take over," said Wilkinson.

He said he remained perplexed about an anomaly which has seen the market effectively value Sky City Leisure's shares at twice what the company's convertible notes are trading at.