SYDNEY - Telstra shares closed at the highest level in 10 months as strong demand for T3 shares have given investors a reason to smile.
Telstra shares surged through A$4 ($4.61) for the first time since the end of April and ended at A$4.03, up A6c on theday. It was the highest closing level since February 17, when it closed at A$4.02.
Small investors who bought the T3 instalment receipts for A$2 each under the federal Government's T3 offer have been rewarded with a steady move north since debuting on the exchange on November 20.
The company's T3 shares closed at A$2.59 yesterday, up A6c, or 2.36 per cent and were the third-most traded stock, with 57.4 million shares changing hands.
Retail investors don't have to pay the second instalment of A$1.60 for another 18 months but will still receive Telstra's planned A28c dividend for 2006/07.
ABN Amro Morgans private client adviser Bill Bishop said market sentiment over Australia's largest telco has been transformed because of the success of the T3 sale.
The Government sold A$15.5 billion worth of its Telstra shares in the offer, almost double its original target of A$8 billion.
"The float has also given the market more confidence, people were [originally] telling me that T3 was the worst thing in the world and nobody wanted anything to do with it," Bishop said.
"Now the stock that everybody hated is suddenly under so much demand and it has a sensational yield."
He said institutions were buying the T3 receipts, in lots of one million or more, rather than smaller investors.
The negative sentiment towards Telstra in recent months - due largely to a face off between the Australian Competition and Consumer Commission and the company over regulatory issues - forced its shares to a record low of A$3.43 in August.
