Stock takes: Hot and bothered

Fisher & Paykel Appliances' ongoing sashay towards a recapitalisation is starting to look like the dance of the seven veils.

Just when you think you're finally about to cop an eyeful of a shapely pro rata rights issue or perhaps a neatly trimmed institutional placement, yet another veil (in the shape of an extension to its $80 million interim banking facility) is drawn over the venerable whiteware manufacturer's modesty.

Phew! How long can this go on, the anticipation is excruciating.

F&P Appliances' shares have been so perky lately NZX issued a please explain notice this week.

In response, chief financial officer Mark Richardson said F&P was not aware of any specific reason for the increase in its share price, but he did note the Business Herald's Tamsyn Parker's coverage this week of improved sentiment towards F&P and an increase in ally Whirlpool's share price. Maybe someone knows something the rest of us don't.

Then again F&P's extended teasing may just be getting some in the market overly inflamed. Its shares closed 4c higher at 65c yesterday.

RURAL RUCTION

NZX's latest moves in the agribusiness publishing sector have generated some heat this week but it's hard to swallow the line it marks a crushing blow to competition in this market.

As has been pointed out, this is a congested market. There's a long way to go before it is concentrated to the extent of, say, the mainstream print media here. There's also been a strand of criticism that suggests NZX, because it is a regulator, should not be a player in the market.

But hold on, since when did NZX become a regulator of the rural publishing market?

Nevertheless, as Fran O'Sullivan pointed out this week in the Business Herald, NZX's move into this space does raise the potential that it could supply information from its markets to its own publications on more favourable terms than are available to its competitors.

NZX is working towards establishing new financial deratives - such as dairy futures - and a market on which they can be traded.

Under Weldon NZX has moved to a situation where selling information about its existing markets has become more lucrative than clipping the ticket on trades.

But the potential conflict of interest is not an unmanageable one and the Commerce Commission, hardly seen as a pussycat by most business people, should be more than equal to the task of ensuring it does not become a problem.

LATER, REGULATOR

As far as Stock Takes is concerned, the fact NZX is a capital markets regulator is a different kettle of fish.

The Business Herald has for the past couple of years reported the misgivings some of the grey beards of New Zealand business have about NZX being the front-line regulator of the market it operates .

Talking to a senior markets figure recently who is close to the NZX, it appears there is some high level recognition that NZX's market operator/regulator status is not ideal and the Securities Commission should eventually assume overall responsibility for capital markets regulation.

However, the source points out that given the big expansion of the commission's scope of responsibility, particularly with regard to financial advisers, any step in this direction is going to be some way off.

MICRO WAVE

Several New Zealand companies have been talking up their wares at the Macquarie Securities Conference in Australia this week in a bid to boost interest from institutional investors.

Retailer The Warehouse, Sky TV and Rakon all attended the three-day event which finishes today and gives companies access to hundreds of fund managers across Australasia and Asia.

It's probably unrelated but Rakon's share price has been buoyant this week, rising from $1.32 to hit a high of $1.60 yesterday before closing at $1.52.

The annual event allows around 100 companies to take part, ranging from the big boys presenting as "the Australian leaders" down to the emerging leaders.

Other major broking houses also have similar events but they are not always held in this hemisphere and even when they are there are no guarantees New Zealand companies will get an invite.

Stock Takes understands this year's ABN Amro event was held in Sydney but New Zealand companies were left off the list after ABN sold its New Zealand arm back to management.

Fund managers are expected to be taking a closer look at individual companies this year, focusing on the micro perspective after the last 18 months when the macro economics have had a whitewash effect on the whole market.

PUT IT RIGHT

Financial services company AXA, whose name is a palindrome, is "redefining standards for insurance, investments and KiwiSaver".

The simple but pretty clever advert uses, what is in meaning at least, a kind of anti-palindrome where a statement reflecting negative attitudes to the financial services industry is read aloud as it is shown on screen and then each line is repeated in reverse order, reflecting a positive view of AXA.

An Auckland AXA customer who contacted Stock Takes this week, also thinks it's a clever ad, but it made him choke on his bedtime Milo when he saw it the other night. He has $150,000 invested in the two AXA mortgage funds which were frozen last year and are now in the process of being wound up.

According to AXA's ad "people must think we're attentive, available and reliable so customers will never believe that in insurance and financial services, our promises aren't kept".

Well aside from its original commitment to repay mortgage fund investors on time and with interest, AXA has more recently made and broken two or three promises to its Auckland customer around when he might receive a cheque for the initial repayment on his money under its wind up plan, he tells us.

Stock Takes understands if AXA feels the need to rehabilitate its brand somewhat after the mortgage fund problems but if you say you're putting things right, it helps if you actually do get it right.

MARSUPIAL MENACE FROM ACROSS THE DITCH

Views from nzherald.co.nz readers and also a reader vote reveal a strong feeling that our Australian-owned major banks have not cut interest rates as much as they should in response to Reserve Bank rate cuts.

Add to that numerous anecdotes of businesses summarily having their lines of credit called in or curtailed and the growing number of corporates going to the market for capital after getting the hard word from their banks, and you could be forgiven for taking our Australian guests for a plague of economic possums, rapaciously ringbarking New Zealand businesses from the tender sapling right through to the tall timber.

But the three bank results released in the last couple of weeks hardly suggest they have been contracting their business lending books or padding margins over the last six months.

The banks say they are facing high funding costs both overseas, where credit markets are apparently still very pricey, and domestically, where competition for deposits has kept rates well above the OCR. But basically, competition for deposits is only so fierce because cheaper cash is not available overseas.

And there's the problem, our banks and ourselves as a nation are too reliant on offshore credit. This was exacerbated during the housing market boom when banks sidestepped the OCR and borrowed relatively cheap money overseas which was, by and large, used by us to bid up house prices.

"Not our fault" said the banks somewhat disingenuously, they were only responding to market demand.

Now the RBNZ wants rates to be lower, but our longer term interest rates are increasingly determined on offshore money markets. What's more the lack of pass through of the latest OCR cut to floating rates, which are increasingly favoured by borrowers, suggests the RBNZ's grip on short term rates has weakened too.

We wouldn't have this problem if we had more savings to fund more of the lending that takes place here.

But our record on that score is poor. It would be better no doubt if we as a nation owned more of the assets and businesses in our own country that generate big money like, for example, banks.

The problem is not that they are Australian owned, but that they are not New Zealand owned.