Speculators target returns in resources

THE shockwaves that hit international markets following the events of September 11 put any capital raisings out of the question, prompting some of the more pessimistic analysts to suggest that new capital would remain dry for at least six months.

Four months on and the market has all but forgotten the September attacks and investors, with a bucket load of funds, are starting to hit the market, although stock-watchers remain divided on where the money will be flowing to.

Deacons corporate partner Shaun McRobert said while last year was predominantly a year of companies doing rights issues, there already were signs of a rebound in initial public offerings, as existing stocks looked increasingly well valued.

“There will be a significant number of IPOs coming up in the next year,” Mr McRobert said.

“There’s an increasing amount of interest in the resource market.

“Interest was already starting to pick up before September 11 but that has dampened again. But indications are that they are now offering some better returns.”

Euroz Securities analyst Steve Suleski said investors remained nervous about investing in new companies with no track record.

“That is why it is easier for listed companies to raise money, because it’s already out there and doesn’t have to sell a new story to the market,” he said.

Mr Suleski said there were fewer IPOs, the resource sector excluded, in the pipeline than 18 months ago.

DJ Carmichael First Capital director Doug Young said there were about 30 capital raisings expected in the first half of the year, driven largely by exploration success and more positive sentiment as the economy defies pessimistic predictions.

Mr McRobert said risk-taking investors appeared to have shifted their money from the IT industry to the resource sector, which also was highly speculative, but offered the potential for huge returns.

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