Encouraging “Mum and Dad” investors – you’re doing it wrong
With the process of the Mixed Ownership Model almost complete, details of the share offer are starting to become clear. Up until now, all that was known is that the Government was going to promote ordinary New Zealanders purchasing these shares.
Today, however, some more details have been announced:
- Treasury is currently in the process of tendering the sale of shares
- Traditional share brokers will be joined by the larger retail banks as the point of sale for shares as they are likely to be less daunting for first time buyers
- According to ONE News, “the minimum share purchase will be around $1000.”
Selling at banks is an excellent way to get ordinary New Zealanders into the process of the public share offer, however having a minimum parcel value of $1000 is not. In fact, the only way, with the current regulation in the New Zealand Stock Exchange, that the minimum parcel for a stock would be $1000 is if the share price was more than $40 (see the minimum holding requirements from the ASB Securities website). The only exception to this I could find is the stock WIN, which currently has a minimum parcel worth over $1000.
If the Mixed Ownership Model is about getting ordinary New Zealanders buying shares, the minimum investment should be 1 share. Let people decide how many shares they want to buy and how much money they have to spend on these shares. The benefits I’ve mentioned before about the Mixed Ownership Model come partially from the increased sense of the free market within the actual company, so why not make the share float entirely up to the free market?