Is the market fair for all shareholders

Published in the Geelong Advertiser - June 2014 by Dale Gillham

Do you believe our market is fair for all shareholders? Many smaller shareholders are saying that the outcome of the battle over Westfield Holdings (WDC) and Westfield Retail Trust (WRT) will show us just how fair our market really is.

The 2010 spin-off of WRT from the main holding company was part of a grand plan by the Lowy family to release their main interest in WDC, and this year the Lowys moved to phase two of that plan to further change the structure of the two companies. But the financial bottom line is that WRT shareholders would end up with the raw end of the stick, a view strongly supported by the Australian Shareholders Association (ASA) and although the fight is not over, the proposal was successfully blocked.

The Australian Shareholders Association aim to unite individual shareholders so as to have greater influence over corporate decision making in Australia and they appear to have done that in this case. Proving the power of one can become the power of many. Returning fire, the Lowys have come back at the ASA, citing that financial advice has been provided without the appropriate license.

Making a market fair is not just about good corporate governance and having appropriate protections in place for all shareholders, I believe it is also about you, the investor making your vote count when you feel strongly about decisions being made by the big corporates. As we have seen with WRT, believing in the power of one can make a difference.

So what do we expect in the market?

On Friday the market had recovered some of the prior decline seen earlier in the week to close at 5443 points, however, this week the All Ordinaries Index has moved back down to test support from last week’s low. This move doesn’t change my current view on the market, however, it confirms that the market is still locked within a medium term sideways trading range as mentioned in a previous report, which currently extends from around 5300 to 5500 points. Given this, the market may head gradually towards the lower band of this range by the end of the financial year or into early July, before the next rise.

History shows that there are times when nothing much happens on our market from week to week, however, you may be led to believe otherwise if you are tuning into reports on the daily moves. Medium to longer term investors know though how day to day activity isn’t very useful.

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