Monday, August 6, 2007

Government Market Manipulation - AIA/DAE Airport Deal

The comment today by Phil Goff, that his Labour Government was not in favour of Auckland International Airport(AIA)being merged with Dubai Aeronautical Enterprise(DAE) was either cunning or utterly moronic.

Regardless of motivation, the result was almost 5% being wiped off the share price today.

Institutions with this sort of sway, especially Governments, would be wise not to meddle in markets of any kind. We know this always ends in disaster.

Recent Government meddling in the New Zealand Share Market has seen "inopportune" comments made to markets by Prime Minister Helen Clarke, then one of her ministers, over Air New Zealand(AIR)and at least two ministers regarding Telecom (TEL) with resultant losses for New Zealand Share Holders.

New Zealands' Minister of Finance, Micheal Cullen (incidentally a Dr of History not economics)has also tried to influence the Kiwi Dollar by making negative comments about our economy. In tandem with Cullen our Reserve Bank thought they knew more about trading Forex than the likes of Warren Buffett, they tried to undermine our currency by selling the Kiwi and lost millions and the dollar increased by more than 5c against the Greenback within weeks and Buffetts' warchest got just bigger.

Today's negative comments about AIA and the Governments lack of backing were at best reckless naivety and at worst designed to lose market speculators in AIA stock money.

New Zealand doesnt own the Airport, it is owned by shareholders, Auckland and Manukau City Councils own a minority stake and like individual shareholders it is up to them whether they sell their property. Not those in Government who don't know or care about business and private property rights.

To use its privileged position to influence markets to their desired outcome/s is not only dishonest but shows a complete disregard for the way markets are supposed to work.Governments opposition to the AIA/DAE deal should have been made at the appropriate time, that is, at the conclusion of the Commerce Commissions decision. Never before.

Individuals and those in the Financial Industry, if caught, face penalties for market manipulation. Phil Goff should face censure and fines brought on it by the NZX or the Commerce Commission or both but is, as usual, unlikely to face any censure.

Mainstream Media have been, as usual, quiet on the subject.