Power shares

[Balance]

Just watch out - this government is a big fan of exporting hydrogen from NZ one day and zero carbon electricity. They might see Tiwai exiting as a great way to kill off Huntly and also start producing green hydrogen.

Sometime in the future - but not in 2020 or 2023, election year.

The track record of this government is - forget about green and promises about the environment - it's all about returning to power in 2020 and further beyond.

[Beagle]

Therein lies the opportunities in the market?

Think ATM, Serko, Xero, Synlait and FBU (Ralph Waters' time) when uncertainty allowed shrewd investors to buy in and make mega returns.

https://www.stuff.co.nz/business/117...minium-smelter

To me, it's very clear that Rio Tinto has the full measure of this current pathetic U-turning Labour government - they will win the concessions they want - because it's election year in 2020.

It's that simple.

So happy to add to my power shareholdings on the backfoot as the 'frightened' ones sell out.

I have learned that momentum is a powerful force not to be underestimated. They may be a buy again at some point in 2020, in my opinion.

The thing is Utilities and REIT's have been massive outperformers in 2019 as the herd flocked to the intrinsic safety of these types of investments seriously concerned that a bad recession was a very real possibility for 2020. Its starting to look like this global recession is considerably less likely.

REIT's and Utilities have done incredibly well but doesn't mean that they'll be outperformers in 2020. If we get some sort of reasonable trade deal (which I am sure the pure narcissist will want so he can enhance his chances of being drunk on power for another 4 years), growth, cyclical and value shares could be the outperformers in 2020.

My best guess (and that's all it is), is REIT's and utilities will underperform the market between now and at least the first few months of 2020. Of course if there's no trade deal at all and the trade war hots up then they'll be back in fashion again in the blink of an eye.

[Balance]

I have learned that momentum is a powerful force not to be underestimated. They may be a buy again at some point in 2020, in my opinion.

The thing is Utilities and REIT's have been massive outperformers in 2019 as the herd flocked to the intrinsic safety of these types of investments seriously concerned that a bad recession was a very real possibility for 2020. Its starting to look like this global recession is considerably less likely.

REIT's and Utilities have done incredibly well but doesn't mean that they'll be outperformers in 2020. If we get some sort of reasonable trade deal (which I am sure the pure narcissist will want so he can enhance his chances of being drunk on power for another 4 years), growth, cyclical and value shares could be the outperformers in 2020.

My best guess (and that's all it is), is REIT's and utilities will underperform the market between now and at least the first few months of 2020. Of course if there's no trade deal at all and the trade war hots up then they'll be back in fashion again in the blink of an eye.

Good thoughts, Beagle.

There is also another factor - interest rates.

[penn]

The market for power shares looks strong today withe the fast tracking of the transmission lines. MEL up 4% at the moment, and the others looking strong.

[horus1]

I cannot understand this. Surely this confirms a high riskof Tiwai closing

[Beagle]

The market for power shares looks strong today withe the fast tracking of the transmission lines. MEL up 4% at the moment, and the others looking strong.

Can you call improving connectivity of Manopouri output of from 2023 in to 2022 fast tracking ?
In an ugly break-up scenario where Rio gives just 12 months notice of closure there's still quite a gap there where there's an awful lot of power with no home to go too.
I think they're trying to hedge their bets horus1 which makes sense as sooner or later they'll be pleased they did.

[Snoopy]

I cannot understand this. Surely this confirms a high riskof Tiwai closing

Both Contact and Meridian have by far the greatest generating capacity in the South Island. I guess they are the most likely to suffer if Tiwai closes and they can't get their power north? Having said that $5m from Contact and $5m from Meridian is not big money in power infrastructure investment terms.

The other reason to do this is gamesmanship. If Tiwai know that power from Manapouri can be redeployed elsewhere relatively quickly, then there is less likelihood of Tiwai playing 'hard ball' with their own power price negotiations. That's how I see things anyway,

SNOOPY

[Jaa]

Both Contact and Meridian have by far the greatest generating capacity in the South Island. I guess they are the most likely to suffer if Tiwai closes and they can't get their power north? Having said that $5m from Contact and $5m from Meridian is not big money in power infrastructure investment terms.

The other reason to do this is gamesmanship. If Tiwai know that power from Manapouri can be redeployed elsewhere relatively quickly, then there is less likelihood of Tiwai playing 'hard ball' with their own power price negotiations. That's how I see things anyway,

SNOOPY

With interest rates so low, now is a great time to for NZ Inc to commit to long term infrastructure upgrades as the Reserve Bank and Government have requested (Megan Woods is very impressive). Great to see NZ Inc working together.

Also Snoopy, analysts have stated that Contact has the most to lose from a Tiwai shut down, then Meridian. Hence why Contact fell more than Meridian over the last while.

In an ugly break-up scenario where Rio gives just 12 months notice of closure there's still quite a gap there where there's an awful lot of power with no home to go too.

You are talking about 6 months or so in an asset with a lifetime of what? 50? 100 years? A one off and a good chance to do a bit of serious maintenance/improvements.

[dln]

In an ugly break-up scenario where Rio gives just 12 months notice of closure there's still quite a gap there where there's an awful lot of power with no home to go too.

A vacated Tiwai would make an excellent pre-connected green hydrogen plant.

[Beagle]

You are talking about 6 months or so in an asset with a lifetime of what? 50? 100 years? A one off and a good chance to do a bit of serious maintenance/improvements.

MEL shareholders will be hoping its more than 50 years since it was built in 1971 and is 48 years old already ! Anyway...I agree with the other Beagle that $5m each is chump change in terms of capex for CEN and MEL to help Transpower speed up grid development and thus give them options if Rio pull out.

Should be another good day for REIT's and utilities as it seems we're in risk off mode again and US 10 year rates fell more than 10 basis points.
Not sure how much juice they have left in them with this smelter overhang issue though so I'll be sitting on my paws.