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Govt savings bodies close to saturation point with NZX shares

Government pension and savings funds collectively own more than 5 percent of 47 companies listed on the NZX and more than 10 percent of 17 companies.

The analysis of combined market power of Accident Compensation Compensation, New Zealand Super Fund, Government Superfund and National Provident Fund is disclosed in an annual portfolio report by Treasury's Crown Ownership Monitoring unit.

The review also discloses $199.2 million of expenses, including staff costs, to manage the Crown financial institutions' (CFIs') funds in 2011-12, $110.7 million of which for the Super Fund.

The analysis found they had $3.5 billion worth of investments as at June 29, 2012, equal to 6.3 percent of the NZX's capitalisation and 9.6 percent of its freely floating capital.

"Where the combined holding across the CFI portfolio totals more than 10 percent there is potential for CFIs to represent a significant percentage of voting rights should they each choose to vote in line with each other," the report says.

The reality is that they employ external managers, which limits their ability to work together.

CFI's collectively own 15.6 percent of Skellerup, 14.4 percent of Auckland International Airport, 13.9 percent of NPT, 13.5 percent of Restaurant Brands and 13.2 percent of Ebos.

Kathmandu, Fisher & Paykel Appliances, Kiwi Income Property Trust, AMP NZ Office, Diligent, Infratil, DNZ Property, Sky City Entertainment, Argosy, Nuplex, Pumpkin Patch and NZX itself are also on the list of combined holdings in excess of 10 percent.

The aggregate $3.5 billion worth of shares in NZX-listed companies as at June 29, 2012, is up 30 percent from the level as at November 30, 2009.

The ACC, which managed investments in house, was the most efficient of the CFIs in terms of investment management costs.

"It is encouraging to see that over the past two years the active investment strategies employed by the CFI's have in aggregate added value after fees to the Crown's CFI portfolio," the report says.

(BusinessDesk)

Comments and questions

This is a good thing and if similar reports were done in Singapore, Norway, Qatar, for example, being three countries where their Crown /government has significant savings, it would show similar, if not larger, holdings. Treasury need to get their focus off believing that offshore investors are important to NZ and are required for the Mixed Ownership Model IPOs - an angle that the offshore investment banks they have appointed continue to push.

So long as the companies remain semi-autonomous (other than standard shareholder rights), what's wrong with strong investment in NZ companies? Surely this lack of reliance on foreign capital is something that the Government has been calling for, for decades?

So when the Clark government prevented the sale of shares in Auckland International Airport to the Canadian pension fun and the share value dropped, the NZ govt investments took a big hit?

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