Opinion & Analysis
In parts of the Christian church, Limbo is a waiting room where departed souls are stuck before getting a gold card to enter heaven.
OPINION: You can be there for years, hearing the angels and saints next door enjoying a non-stop rip-roaring party playing harps, singing and dancing . . . and not worrying about a hangover the next day.
Today, with an unpredictable election nearing, investors are also in limbo, though hopefully they will know on September 20 who our political masters will be.
This is shaping up to be a crucial election for the economy, business, trade, communications, the nation's infrastructure and the investment community.
But you would not know it from the way the pre-election debate has been hijacked by the Government's political opponents.
Instead of concentrating on vital issues about what the different parties are offering - such as monetary policy and how changes to the Reserve Bank might work in practice - the daily emphasis is on the drip feeding of stolen emails from a thief.
We have the scary prospect of the new government being a haphazard collection of different ideologies. This includes the Dotcom-Mana Party (of which one part likes making and spending money, and the other wants to redistribute the nation's wealth) and NZ First, which - no matter how many seats Winston Peters picks up - will be dependent on the health of its elderly leader.
Who can name any of his current MPs and how they would act should he be incapacitated?
The approaching election is prompting investor caution.
We are part way through the reporting season, when many of the country's biggest companies reveal how they have been performing. There have been no nasty surprises so far; most company results have been in line with expectations or better.
Friends in the investment world say most of their clients expect the Government to be re-elected, though there is concern at the high level of uncommitted voters. So far this has not led to any sign of panic selling - NZX turnover has been moderate and the main indices have shown modest gains.
A key indicator will be the electricity stocks.
So far they have held up.
Can this continue if polls point to a change in government?
They face major changes in their existing business models from a Left-wing administration.
Analysts have attempted to account for possible political changes by being conservative in assessing last week's profit results. Even so, First NZ Capital has an outperform rating on Contact Energy (with a target price of $6.10); Craig's Investment Partners rates it a buy (to $6.50).
FNZC rates Meridian an "outperform" to $2; Craig's says Mighty River Power is a buy (to $2.73). Shares in this sector are expected to bounce in a general relief rally if National wins.
Investors will be aware of the prospect of regime change.
For weeks most brokers have been advising clients to review portfolios and weed out stocks whose valuations may seem "stretched". Essentially this involves selling or reducing stakes in companies that have had good runs and could be vulnerable in weeks of change and uncertainty.
They are also noting a few possible safe havens, such as retirement homes and the dairy sector. Fixed interest investors are having a boring time.
They have not benefited from the rises in mortgage rates.
Major companies can borrow more cheaply overseas than on the domestic market.
Overseas markets give few leads: in the United States the Federal Reserve last week talked about a sooner than expected rise in interest rates due to an improving job market; there has been similar talk at the Bank of England. Conversely European economies remain sluggish, not helped by the Ukrainian and Middle East situations.
The tech section of the Kiwi market is well off its March highs and largely failed to take a lead from the US Nasdaq market which last week hit its highest level since March 31, 2000. This does not reflect lack of interest - a spate of new issues, while raising a lot of cash, has distracted investors by performing poorly on listing with the notable exception of Eroad.
Fletcher Building is being closely watched due to the big role it has in the reconstruction of Christchurch and its sizeable exposure to the lacklustre Australian economy.
Its latest result was only slightly better than last year, though management expressed confidence about Australia and expects further strength in New Zealand residential activity.
First NZ Capital raised its recommendation to outperform, with a target price of $10.80; Craig's says Fletcher could gain a further 10 per cent.
Freightways continues to shine while NZ Post struggles.
Its normalised tax-paid profit rose 12.2 per cent to $43 million, helped by strong earnings from its Express Package division.
FNZC raised its target price from $4.90 to $5.10.
The gloss has faded from Trade Me, not helped by a row with the real estate industry, though job and car ads did well.
Craig's rates it a hold and FNZC an "underperform".
- The Dominion Post