KEY POINTS:
Much as one might tune in (briefly) to a professional wrestling show or Fox News on television for the bracing sense of wonderment that comes from being exposed to a set of values that seem to be as far from one's own as it is possible to get, Stock Takes will from time to time check out the blog of prickly expat tax lawyer Cactus Kate.
She is clearly no fan of NZX chief executive Mark Weldon, but Stock Takes reckons she has something of a point with her criticism of the multiple roles NZX has assumed under Weldon's stewardship, and the potential conflicts of interest that arise.
A week ago she posted on her website a copy of a letter from the Securities Industry Association, which represents the sharebroking industry, to Weldon outlining its members' views on NZX's plans to establish a clearing and settlement business.
NZX trading operates under a broker-to-broker model where securities and cash are exchanged directly between participants. It
is proposing a central clearing house, operated by itself naturally, through which transactions would pass.
This has some advantages which Stock Takes understands most brokers would welcome, including a guarantee of payment, but the word is that many, many brokers believe now, in the midst of a major economic slowdown, is not the time for a costly rejig of back-office operations.
Of course, this is likely to result in yet another revenue stream and NZX, having probably spent a fair bit of cash already on the plan, is keen to carry on regardless.
At least some broking houses are feeling as though they are being pushed around here and it sounds like some feel they may be pushed right out of business.
"In our view, to proceed without such a level of agreement in the current environment may lead to an outcome that permanently and adversely affects New Zealand's capital market development, with one likely effect being the increasing and significant risk of loss of participants," the SIA tells Weldon in its letter.
UNSATISFACTORY YEAR
News of the impact the global slowdown is having on the Chinese economy suggests that it can't be easy going for the Guinness Peat Group-owned UK threadmaker Coats, which has substantial operations there.
While the work GPG has put into Coats has probably ensured it is in better condition to deal with the downturn than it might have been, it's safe to assume GPG were probably hoping for better trading conditions than this as they seek a return on their investment.
The crisis has affected Sir Ron Brierley's company elsewhere, too, with speculation mounting that GPG may have to write off its investment British concrete, gravel and building materials company, Ennstone.
Ennstone, which has operations in Poland and the US, broke its banking covenants recently and is likely to have some or all of its divisions placed in administration by lender Barclays.
Its shares have been suspended from trade on the London Stock Exchange and have lost 99 per cent of their value last year after trading as low as 0.3 pence.
GPG built up its stake in Ennstone through last year to become one of its major shareholders with 9.3 per cent.
According to an early January trading update GPG's stake in Ennstone is now valued at only 200,000, but there was no indication of how much it had lost on the investment.
Last year was - as Sir Ron said in the trading update in which he also said Coats' 2008 profit would be less than originally anticipated - "a very unsatisfactory year".
GPG shares were up 1c at 83c yesterday, not far off the 10-year 78c low they hit earlier this week.
BACK IN BLACK
It is early days but the league tables for top stock of the year so far make interesting reading. In fact, they are a blast from the past. First off, there are actually some stocks in positive territory. Okay, that reflects the low point late last year, which we all hope was the market hitting bottom.
But even more of a throwback is Telecom's appearance as one of the big risers of the year. It comes in at number two - up 17 per cent for the year to date.
Anyone who had the stomach to buy in during last year's panic selling when the shares nudged historic lows of $2.20 must be feeling pretty good. The company might have its problems but it still has an enormous cashflow coming from its fixed-line business. Some might say that technology is outmoded but one suspects it will be around for a few years yet. Telecom shares closed at $2.70 yesterday.
Top spot is currently with Tower, which is up 19 per cent since January 1. Third spot is with Auckland International Airport, up 16 per cent.
No doubt it is a patchy rally with most retailers still struggling and heavyweights Fletcher Building and Contact yet to join the rebound - but long may it run.
It will be interesting to see if New Zealand investors can stomach a tough round of results coming up over the next month or so (Fletcher Building is the first of the big ones next Thursday).
Most of the big profit falls should have been signalled by now and lower returns will hardly be a surprise in the current environment, but the results season is typically the time for chief executives to offer fresh forecasts and opinions on outlook for the business. One suspects their words will be followed very closely this year.
RUDD'S RESCUE IS GOOD NEWS FOR FLETCHER
While New Zealand's "rolling maul" of Government responses to the economic slowdown continues to, well, roll on, Kevin Rudd's Government this week unveiled a far more formidable A$42 billion ($53 billion) package.
Don't be jealous, though, the love is likely to be shared by New Zealanders too, and not just those living across the Ditch.
Part of Rudd's package is a proposal to provide free insulation to 2.2 million homes at an estimated cost of A$1600 each.
Morningstar analysts point out that Fletcher Building has "a sizeable insulation presence in Australia" with an estimated market share of 60 per cent.
But it gets better. Fletcher's main rival in the market is CSR, which has the other 40 per cent and is 4.8 per cent owned by Guinness Peat Group.
"The stimulus package (if it goes through) should create additional insulation demand in excess of A$4 billion," says Morningstar.
"This is significant and represents nearly seven times Fletcher Building's existing insulation revenue assuming its market share remains intact."
Morningstar is waiting for further confirmation of the plan before it alters its view on Fletcher, which is currently a fairly solid looking "buy" anyway.
Fletcher Building shares were down 1c at $5.52 yesterday.
CONTACT CONFIDENT ABOUT SAUNDERS
Contact Energy is confident court cases faced by director Tim Saunders laid following his spell at the helm of Feltex's board will not interfere with his work for the electricity company.
Along with four other former Feltex directors, Saunders is fighting criminal charges relating to public disclosures at the carpet-maker which went into liquidation, leaving shareholders who had invested $254 million holding worthless stock.
The Contact board veteran also faces civil action relating to the Feltex prospectus.
When pushing for a directors' fee pool increase last year, Contact stressed the heavy workload faced by the board which presumably could be even more demanding given recent announcements on the deteriorating outlook for the company.
"There is no evidence that the proceedings will impinge on Mr Saunders' service as a director of Contact at this time," a spokesman for the company said. "The proceedings involving the former Feltex directors is unrelated to Contact, and Contact is not providing support to Mr Saunders in relation to this matter."
