Stock takes: Investors feel the fear

Instead of being spooked and selling shares investors need to take a long-term approach, says market commentator Arthur Lim. Photo / Supplied

Volatility in the markets has retail investors running scared at what could be exactly the wrong time.

Figures from FundSource this week show retail funds under management fell by a whopping $503 million in the three months to June 30 - a drop of 2.5 per cent.

FundSource believes investors may have been spooked by substantial falls in world sharemarkets in April and May, sparked by the sovereign debt crisis in Europe.

But FundSource warned investors to take a longer-term view as pulling money out of managed funds materialises their losses.

Market commentator Arthur Lim said retail investors appeared to be doing themselves harm by piling out of the market at the wrong time.

The fact that retail investors were fleeing showed the market was likely to be bottoming out. He said it was time mum and dad investors stopped buying at the top of the market and selling at the bottom.

"If New Zealand investors are ever going to lift their game they are going to have to think more strategically."















BIDDING FOR BRISBANE

Fund manager HRL Morrison and Co is in the bidding for the Port of Brisbane but exactly who it is buying on behalf of has yet to be made clear.

The New Zealand Superannuation Fund, which Morrison manages money on behalf of, has not denied being part of the bid, saying only that it is well known that Morrison looks after some of its cash.

But Infratil itself is not expected to be involved in the bid.

One analyst said Infratil didn't have the capacity to undertake that kind of investment.

But it begs to differ who else could be partnering up with our taxpayers' dollars? The port is expected to go for $2 billion and while the $15.63 billion Super Fund is large it doesn't exactly have a lot of spare cash looking for a home now that its Government contributions have dried up.

The HRL Morrison and Co offer is just one of five bids. According to the Australian Financial Review other offers are likely to include those from sovereign-backed funds in Singapore and Malaysia, Global Infrastructure Partners, Queensland Investment Corporation, Macquarie and a consortium including Morgan Stanley Infrastructure Partners and UniSuper.

TABLES TURNED

Craig Norgate has been appointed to a committee to help decide whether a takeover bid from Singapore-listed Olam International is a good move for New Zealand Farming Systems Uruguay.

Norgate has typically been on the buying side of most deals in recent years and it can't be easy to now be on the other side of the fence when someone else is bidding for your baby.

Norgate is considered to be an independent voice on the takeover given he no longer owns a stake in PGG Wrightson, which has already agreed to sell its shares in NZFSU to Olam.

But some might question his independence given he was the key driver behind bringing PGW together and it was only six months ago he resigned from the board.

One market source said it was always going to be tough for Norgate to be emotionally detached from the situation but given his experience he was probably a good choice for the committee.

Norgate is joined by fellow NZFSU directors Graeme Wong and John Parker on the committee.

Olam is expected to find it hard work getting shareholders to agree to sell out. All eyes are now looking to the independent report by specialists Grant Thornton to give some guidance on the value of the deal.

NZFSU closed up 1c yesterday at 56c.

DOWN IN THE DUMPS

Yesterday's quarterly briefing by New Zealand Oil & Gas failed to find much favour with shareholders.

NZOG chief executive David Salisbury told investors the company made $31.3 million in operating revenue for the June quarter, putting its revenue for the full year at $99 million.

It shelled out $38.9 million to support its investment in Pike River and a further $11 million on exploration.

Salisbury said it was "very disappointing" commercial discoveries were not made in two wells drilled to the southwest and east of Tui, but the results overall had, with one exception, validated the geological modelling of Tui.

"So we continue to look at prospects around the Tui field," Salisbury said.

But despite talking up prospects of its offshore Taranaki field at Kaupokonui, NZOG's share price fell, adding to a tough year in which the shares have fallen by more than 26 per cent.

NZOG is now the biggest decliner in the main listed companies outstripping even Telecom's poor performance.

Shares closed down 1c yesterday on $1.23.

BNZ BOND DROPPED

Stock Takes hears BNZ tested the market for a retail bond offer late last month after successfully selling $425 million in covered bonds to institutional investors.

The institutional offer stirred interest from mum and dad punters but the testing was withdrawn just days after going out through several broking firms, leaving some puzzled about the decision.

According to a BNZ spokesperson, the bank decided not to go ahead with making a formal offer because swap rates dropped dramatically the day after the email was sent out making it less attractive to retail investors.

The proposed offer would have been an extension of an existing bond with a rate of 6.905 per cent maturing in 2016.

But it might have been a hard one to sell in a market where investors can get more than 8 per cent from a Government-guaranteed finance company.

WALKER WALKS AWAY

Stephen Walker is to leave Devon Funds Management just four months after the company was set up.

Walker joined Goldman Sachs JBWere in 2008 when his company Walker Capital Management was acquired by Goldman.

There he became head of asset management.

But when the asset management arm was bought up by Paul Glass in March this year Walker was only signed on with Devon for a short-term contract.

That was due to expire at the end of June but was extended until the end of July and he is now expected to finish up at the end of this week.

It's understood that with new portfolio managers Chris Gaskin and Slade Robertson joining the firm from Brook, there were just too many chefs in the kitchen.

Walker said people shouldn't be surprised by his departure as there was never going to be a suitable role for him at Devon.

He didn't rule out setting up his own business again.

But he said he was seeing his latest move as an opportunity to get back into an asset management role.

NEXT PHASE

There were no surprises from dental and audiology business Abano Healthcare when it came to reporting its full-year result this week. The figures were bang on a forecast made at the end of March.

Abano has always made it clear that its revenues would be lower in the second half of its May 31 financial year after selling off its stake in the New Zealand audiology business Bay Audiology.

Shareholders have stuck by this well-run business and were richly rewarded last year with a $29.5 million payout from the sale. But now it's time to be patient again as the company builds up its audiology business in Australia and expands into Asia.

China has a lot of promise with its low level of hearing aid penetration and growing class of wealthy citizens but as other Kiwi firms have found, breaking into that market takes time and patience.

Abano, which first listed on the stock market in 1970, has been a faster grower in recent years. Stock Takes watches with interest to see where it goes from here.

Abano shares closed steady at $5.30.