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Hobbitses (sic), said Gollum, are tricksy, fat and stupid. The way they are taking over popular perceptions of New Zealand is not so much sneaky as an all-out marketing assault. While Wellington basked in hobbit-mania amid the world premiere of Peter Jackson's new film this week, just around the corner was an event of rather more importance for financial perceptions of the country than devising a series of Middle Earth tourist itineraries; the listing of the world's biggest dairy group.

Fonterra's new units closed their first day on Friday up almost a quarter at $6.85 New Zealand ($5.58) after having already priced at the top of their range. The co-operative is New Zealand's biggest group with a market capitalization of more than $8-billion (New Zealand). The units form a shareholders' fund that has economic, but not voting, rights. For investors, the attraction is nothing to do with Middle Earth or even New Zealand's well-established dairy reputation, but rather opportunities in the Middle Kingdom and other emerging markets.

Fonterra thinks demand in China will grow by 7 per cent a year to 2020 – twice the rate of supply. The company's milk powders and products have benefited from the 2008 contamination scandal that hit Chinese brands. Although Asia and other emerging markets account for just under a sixth of sales, their operating margins, at between 10 and 15 per cent, are at least twice those on the domestic and Australian businesses that still dominate sales.

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Milk mustaches all around? Not necessarily. Fonterra's farmer-owners could yet prove to be more invested in their share of basic grass-to-glass milk profits than spending to develop higher-margin businesses. Still, in a country where cows and sheep outnumber people eight to one, there is enough appeal, for now, in the sort of model that wouldn't look out of place in Hobbiton itself.

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