Stock Takes thinks the late American author Elbert Hubbard was right when he said: "Life is just one damned thing after another."

The same could be said of the financial markets. At any given time, there is always some crisis going on, somewhere. It just so happens that the crisis this time around involves the world's biggest economy, the United States, and several chunky European countries, like Italy and France.

Against the background of all that market mayhem (most of it concerning sovereign debt), work is still proceeding on a handful of initial public offers (IPOs) on the local scene, but unless market conditions improve and stabilise, Stock Takes understands that they will probably not see the light of day before Christmas.

The sharemarket has gone through some extreme gyrations since the US and European sovereign debt problems hit the headlines a fortnight ago, but interestingly the NZSX-50 index has made up all the ground lost when the trouble first started.


The investment community, however, is not fooling itself that this is the end of the story. Realistically, there will need to be a calm patch of a good few weeks before IPOs start to emerge from the woodwork. Work is continuing on the IPOs for Wellington-based retirement and aged care company Summerset, and Auckland-based retirement village company Vision Senior Living.

"The reality is that you won't be able to price an IPO in the next two or three weeks," said one investment banking source.

"There will have to be a path forward for the sovereign debt issues in Europe and there will have to be a path forward for the way the US is going to think about cutting costs and raising taxes.

"Unless we have that, it is unlikely that markets will be conducive [to IPOs]," he said.

Meanwhile, the Government's partial privatisation plans are continuing apace. Again, market conditions are likely to play a part in the timing of these sales, assuming they garner enough political support.

Trade sales
Trade sales are in a similar boat to IPOs in that they also require a measure of stability to get off the ground. The sale process for biscuit maker Griffins, which is owned by Pacific Equity Partners, is expected to be completed by the end of the year. Guinness Peat Group's 65 per cent stake in Turners and Growers is also expected to be sold by early next year.

NZX upbeat
While an air of uncertainty hangs over the the IPO world, NZX chief executive Mark Weldon thinks the operational separation of Telecom will boost the stock exchange operator's revenue over the second half. The NZX had expected a few IPOs in the second quarter, but they did not materialise.

"We are unsure of the impact of recent market volatility on those, but there are companies - four in particular - with plans that have been disclosed to us," he said.


"We remain optimistic and positive," Weldon said at the company's release of its interim result. He said he had spoken to about six listing hopefuls so far this year, with one opting to pull out.

"What causes angina around market listings is not so much price levels but uncertainty. If I say I'm going to IPO in three weeks, I want to know it will be at approximately the level that I can get today, so we would hope to see it settle down quite quickly."

NZX reported a 42 per cent rise in normalised first half-net profit to $6.6 million and revenue rose by 11 per cent to $26.6 million. NZX's second half is traditionally a little better than its first. Securities trading had a bumper half year and daily volume, by dollar value, jumped to $118 million from $84 million in the previous corresponding period.

In the heat of the crisis, the NZX was handling more than 6000 trades a day - its highest ever daily average - with activity spread across the board, from global hedge funds to New Zealand retail investors. Settling transactions in times of intense volatility and trading activity can be a problem, but Weldon said the NZX's systems, particularly the clearing house function it shares with the Reserve Bank, stood up well.

"My only expectation is that because this crisis is generated by governments in Europe and the United States, sooner or later it is going to stabilise," he said.

Domestically, businesses have strong balance sheets and are well cashed up, he said.

Despite all the turmoil, NZX shares have fared quite well over the year. They closed yesterday steady at $2.18.

Mystery explained
Ever wondered what Revenue Minister Peter Dunne actually does?

Stock Takes can reveal that the honorable member has been wrestling with the issue of livestock valuation schemes and the tax treatment of holiday homes.

Dunne and Finance Minister Bill English have released papers on the matter for public consultation. Dunne says the rules appear to be too loose, allowing farmers to switch between livestock valuation methods, thereby providing an unfair tax advantage.

PricewaterhouseCoopers tax partner Geof Nightingale said "mixed use" assets are those that have both a private and business use. The main category affected will be holiday homes that are rented out. Other things might be luxury boats, planes or even helicopters. The proposed rules are likely to impose tighter requirements on tax deductions for mixed use assets. Nightingale believes the IRD is right to try to fix the situation.

Heartland result
Heartland NZ, the South Island-based finance company with banking aspirations, will report its annual result today. The company is expected to report a net profit consistent with current market guidance ranging between $6 million to $8 million. The forecast net profit for the combined business following the intended acquisition of the finance arm of PGG Wrightson, in the 2012 financial year, is expected to be in the range of $20 million to $24 million.