“New Zealand as risky as Pakistan, says Newton’s Pidcock” on Dec 11 2013
An Asian income specialist calls time on the New Zealand government’s handling of a regulatory dispute with a telecoms company. source Citywire.co.uk (emphasis ours)
Newton Asian Income Fund manager Jason Pidcock claims a regulatory dispute in New Zealand contributed to a 7.2% loss for the fund since the end of October, leading him to brand the country as ‘politically risky as Pakistan‘.
The £4.3 billion fund was down 7.2% versus a 3.6% fall by the index between the end of October and 3 December, with Pidcock crediting most of the losses to the fallout from a row over New Zealand’s installation of an ultra-fast national broadband network.
Citywire A-rated Pidcock owns two utilities in New Zealand, Meridian and Mighty River Power, as well as Z Energy and telcom firms Telecom New Zealand and Chorus, which all yield 6.3% or more.
Pidcock’s country weighting had been 5.3% but this has now fallen to 4.2% after a combination of market falls and some selective selling.
‘I have to associate New Zealand with political risk. There was an extraordinary event in November where the government reneged on a pricing agreement with telecom firm Chorus,’ he said…
‘It was a failure of the New Zealand government and it has caused a lot of upset in the investment community. It is akin to reducing the coupon on a government bond.’
Pidcock admitted this event had made him reluctant to invest further there as well as reassess his attitudes to risk. He did say, however, that another key overweight, Australia, would be unaffected by events in its neighbour.
‘We will not invest any more money in New Zealand for the foreseeable future. We have to rank it [alongside] places like Pakistan in terms of political risk. This is a shame because it ought to be a developed and stable country.’
Yes, it ought to be.
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