CO2 - Carbon Fund units

[tommy_d]

SP up a further 7.6% today, another strong move - is this sustainable at ~ 16c above NTA ?

Not that I'm complaining!

right now, CO2 is basically an index fund on NZU prices. So, for recent price movement and trading in the fund above NTA

you'd want to:
a) think seriously about future price movement; and
b) more importantly, look at the volumes being traded driving nzu (i.e. underlying instrument) prices.

NZUs are commodities, not financial products, and in a sense the market is fairly unregulated (for background, see open consultation on changing governance of the nz emissions trading scheme secondary market here: https://consult.environment.govt.nz/...or-the-nz-ets/

NZ's Environmental Protection Authority published on privately held NZU holdings (i.e. the NZU market) yesterday: https://www.epa.govt.nz/industry-are...ly-held-units/
there was a change in published breakdowns, it is unclear why, and that might give some clues on likely future price scenarios in this market. The EPA have not explained the rationale for this change.

Of note, this is data at 30 June, and since then there has been an auction at which ~12 million NZUs were sold into market.
That suggests +/- 150 million privately held NZUs, current secondary market trade value (although possibly illiquid due to no sellers?) of approx. $65 - call that $10 billion-ish?

This is an unsophisticated market, with opportunity for those who take the time to understand it. However.... it's a market entirely created by regulation/law - no underlying fundamental desire for product.

Fascinating stuff eh....

edit: if you want to look at how seriously this is being considered, and use the market smarts of analysts from Genesis energy, check out their most recent results presentation, e.g. slide 24 here: .http://nzx-prod-s7fsd7f98s.s3-websit...944/353149.pdf

@Beagle will be able to explain this better than i can, but NZUs as i understand it are treated as excepted financial instruments so retained in books at cost of purchase rather than being revalued.

NZ ETS impacts are not well considered by most....