Education of shareholders as to the benefits of holding on to shares in the energy companies being partially sold down by the Government will be essential, brokers say.
Mighty River Power is likely to be floated on the NZX by June next year with the Government retaining 51% and 49% available to the public and New Zealand institutions, superannuation funds and iwi. Many brokers are involved in the listing process and cannot talk on the record, but they all told the Otago Daily Times that private investors needed to understand the assets were long-term income earners.
New Zealand investors tend to look at the sharemarket as a short-term investment.
"A lot of people treat it like going to the races - looking at how to double their money quickly to get instant satisfaction. The assets being sold are 100-year assets. That is why they are so attractive to superannuation funds with a 20-year to 30-year investment horizon," one broker said.
Much criticism has come from politicians who complain that the shares will eventually end up in overseas hands. Prime Minister John Key said through the election campaign that he expected between 85% and 90% to remain in New Zealand hands, including the Government's 51%.
The shares do not have to end up in overseas hands, if New Zealand investors decide to hold on to them.
Investors have to learn to leave their money invested in the assets for 20 years and enjoy the income stream. The markets are volatile, but if you look through that volatility, the shares are likely to produce strong dividends.
