Investors prepare for a potential buying bonanza in Contact Energy and Meridian shares today. Photo: Contact Energy website.

Business & Investing: Stand by for action in Contact and Meridian shares as Blackrock is forced to sell down holdings, Plus: A new bid for Tilt Renewables 

The NZX50 fell 0.9 percent yesterday as investors cashed up in anticipation of a possible buying bonanza today in Contact and Meridian Energy shares due to a forced sell down by US fund giant Blackrock.

S&P is changing the makeup of its Global Clean Energy Index from today after the demand for the fund overwhelmed both energy stocks in January sending their share prices skyrocketing only for them to retreat back to roughly where they were priced in December once the buying abated.

A new set of index rules will see 51 new stocks added to the index, greatly reducing the weight of the NZ stocks in the process.

The new rules limit the index from owning more than 4 percent of any single company, while BlackRock – which runs an ETF based on the index – currently owns 14 percent of Contact and 7 percent of Meridian.

While BlackRock’s intentions of how many shares it will be forced to sell is unknown, cashed up investors will be ready to pounce if either company’s shares fall below fair value.

Genesis Energy saw the biggest decline yesterday, falling 3.2 percent to $3.36 while Auckland International Airport, which was also caught up in the selloff, fell 2.6 percent to $7.50.

Tilt Renewables set to reveal possible eleventh-hour bidder for the company

Shares in Tilt Renewables were placed in a trading halt yesterday following the apparent emergence of a new, eleventh hour bidder for the company.

The Infratil majority-owned clean energy company requested the trading halt before the market open to advise “whether Tilt has secured a superior scheme of arrangement for shareholders” according to its NZX statement.

Last month Infratil announced it was selling its 65.6 percent shareholding to Sydney-based PowAR and Mercury NZ – which already owns a fifth of Tilt and is acquiring its NZ based assets.

It’s unclear whether the new offer relates to the assets in just one or both countries.

The deal that had been announced already contained a significant premium to the $704.1 million carrying value of the stake and was set to deliver Infratil a $1.93 billion pay day.

Tilt’s board of directors had previously endorsed the deal and a shareholder vote to approve the scheme was expected to happen in coming months.

March housing data sets new sales records

Another month, another set of real estate records being chalked up, as many investors sought to get in ahead of the change in the Government’s housing policy.

Based on reported sales, March recorded the highest number of houses sold in a March month in 14 years.

Real Estate Institute figures show a total of 9,721 homes changed hands last month a 31.2 percent increase from the 7,408 sold in March last year, notwithstanding the impacts of the Level 4 Covid lockdown at the time.

The REINZ house price index came in 24 percent higher than a year ago.

Gisborne/Hawkes Bay properties saw price increases of up 32.4 percent, while the smallest increases were in Otago, which includes Queenstown, gaining just 12.8 percent. It was the only region to experience price increases below 20 percent.

Underpinning the strength of the market, REINZ reported more than a third of properties were sold at auction.

The Reserve Bank’s reimposition of loan-to-valuation ratio restrictions on investors from March 1 now requires them to have at least a 30 percent deposit which will increase to at least a 40 percent deposit from May 1 which may cool the market somewhat.

Also, the doubling of the brightline test to 10 years will mean investors selling in less than that time will have to pay tax on any capital gains.

The tax deductibility of interest costs will be removed over four years starting Oct 1.

Coinbase listing creates multiple instant multi-billionaires

In one of the most anticipated new listings this year, cryptocurrency exchange provider Coinbase Global finally saw its shares hit the Nasdaq trading boards yesterday at a valuation of nearly US$100 billion, as the company takes advantage of surging demand (and prices) for bitcoin, ethereum and a range of other digital currencies.

Coinbase shares began trading at US$381 a share, a more than 50 percent jump from the issue price of US$250 a share. The stock quickly surged to a high of nearly $430 before pulling back to close at $328 – giving investors a cool 30 percent return on its first day as a public company.

The company opted to list its shares directly on the Nasdaq exchange, as opposed to selling new stock through an initial public offering.

Many market observers predicted the stock would rise sharply from its $250 issue price because the company is already profitable, has rapidly rising sales and a growing number of customers.

The listing has also turned Coinbase CEO and co-founder Brian Armstrong into an instant mega-billionaire becoming the 73rd richest person on earth. At Wednesday’s closing price, his 39 million shares are worth around US$13 billion (NZ$18.3 billion) or twice that of NZ rich-lister Graeme Hart.

38 year old Armstrong and fellow Coinbase co-founder Fred Ehrsam first met on Reddit in 2012 and launched the company out of a two-bedroom apartment when a bitcoin was worth $6 and “was only known by a few nerds on the internet” they pointed out in a tweet yesterday.

Today Coinbase is riding a growing wave of interest in cryptocurrencies that has seen Bitcoin prices more than double this year to a record high of US$64,800 this week.

Ethereum, the second most valuable cryptocurrency, has nearly tripled in value after becoming the digital payment of choice used in transactions for non-fungible tokens, or NFTs, a new and rapidly growing form of investment.

Australian job market recovering faster than expected

The Australian job market continues its strong recovery from the coronavirus pandemic, with better than expected data released yesterday showing a record number of Australians are now in work.

Ahead of the end of the JobKeeper wage subsidy program, the national jobless rate fell 0.2 percentage points to 5.6 percent in March, according to Australia’s Bureau of Statistics. The number of people out of work fell by 27,100.

During the month, total employment jumped by 70,700, taking the number of people with a job to a record 13.1 million.

However, over the past 12 months, full-time employment is down by 2500 people while part-time is up by 76,800.

There is also some contrasting outcomes between states. Although NSW’s unemployment rate fell 0.3 percentage points to 5.4 per cent, there are 64,000 fewer full-time jobs across the state compared to March 2020. By contrast in Victoria, where the jobless rate increased to 6.1 per cent, there are almost 28,000 more full-time workers than a year ago. The Australian Bureau of Statistics noted the jobs survey was taken in the first fortnight of March, well before the end of JobKeeper, which Treasury and private economists expect to hit total employment figures in April.

Financial fraudster Bernie Madoff dies aged 82

Bernard Madoff, whose name will forever be associated with what is likely to remain the world’s largest financial fraud, has died while serving a 150-year sentence in US Federal Prison. He was 82.

Last year, Madoff petitioned the courts for an early release saying that he had terminal kidney failure and a life expectancy of less than 18 months. But the US Attorney’s office for the southern district of New York said Madoff’s crime was “unprecedented in scope and magnitude” and opposed his request.

Madoff was the mastermind behind a US$20 billion Ponzi scheme, a financial fraud so vast that many people, including his investors, initially struggled to comprehend the scale of his offending or how he had managed to conceal such a crime for so long.

In the end, it was the 2008 Global Financial Crisis that exposed the true extent of his offending.

His life came crashing down in 2008 when he was arrested and pleaded guilty to eleven felony charges. He had been using money from new investors to pay back earlier investors in what became the largest Ponzi scheme ever.

According to his records at the time of his arrest he supposedly had a total of US$65 billion under management, but two thirds of that money was a figment of Madoff’s imagination. The rest was his investors’ principal. The amounts and investments shown on his investors statements turned out to be entirely fictitious.

Madoff founded Bernard L. Madoff Investment Securities in 1960, but no one has been able to prove conclusively when exactly he began stealing from his investors.

Irving Picard, the court-appointed trustee charged with recovering assets stolen by Madoff, with the Department of Justice, had recovered US$14.4 billion as of March of this year.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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