Yovich & Co. Weekly Update - 29 October 2012

Oct 29, 2012 | Commentary Offers

This Week's Themes

  • The top 50 shares in New Zealand were little changed and held up well despite weak performances in larger markets. The market was buoyed by positive comments about the economy from the new Governor of the Reserve Bank, Graeme Wheeler.
  • Uninspiring corporate results in Europe and the U.S. weighed on the worlds largest markets.
  • The Kiwi rallied after Graeme Wheeler left the Cash Rate at 2.5% and made positive comments about the local economy. The market was expecting a more dovish announcement after record low inflation figures were released a few weeks ago but his comments spurred the currency to recover recent losses.

Investment News


On Friday, Fonterra issued a prospectus for the issue of $500m of units in the Fonterra Shareholders’ Fund. The units give the unit holder the economic rights attached to Fonterra shares, such as dividend and other corporate actions, but do not carry the right to vote the underlying Fonterra shares. The Fund is designed to support the liquidity of the Farmer-only market for shares, and there are structural features in place to ensure the units and the shares will trade at very similar prices. The units have an expected gross yield of 5.8-7.0% and a cash yield (post PIE tax) of 4.2-5.0% for 2013, based on the indicative price range of $4.60-5.50 per unit.

Here is a link to access the Prospectus and the Investment Statement:


The offer does not open until 5 November 2012, however we are able to take expressions of interest before then. No indication of interest will involve an obligation or commitment of any kind. If you could provide that expression of interest to us by Thursday that would be helpful as we need to give indicative numbers on Friday. Thank you to those clients who after reading the announcement have already feed their demand numbers through to us.

The amount of shares available to our clients is unknown and the final price will be announced on November 27, following the completion of an auction-style book building process. There will be no public pool.

The offer closes on 21 November.







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Jarrod Goodall

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