Forum Archive Index - June 2001

["mrgoodall" <mrgoodall@xtra.co.nz>]

Thanks  for your  post  Snoopy  , interesting Mike G
----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Monday, June 18, 2001 6:39 AM
Subject: Re: [sharechat] defensive stocks


> >
> >im interested to know what shares you feel might come under
> >the defensive heading, in a recessionry environment (nzse)
> > maybe i should of asked what sectors of the economy  (and
> >the companies related to these) thanks  in advance  Mike G
> >
> Even 5 years or so ago, I would have answered this question with with
> a simple answer.  Companies that produce daily staples
> thinking in terms of both goods and services (newspapers, food,
> utility services, roofs over a businesses head, financial services).
>
> However, it is surprising how many risky investments you can find in
> these supposedly safe haven areas of the NZSE without looking too
> hard.
>
> Who would have thought, for instance, that 10 years after the great
> property crash of 1989-90, that companies such as "Trans Tasman
> Properties" are still writing down the value of the properties they
> hold and are in a position where rent received barely covers the debt
> repayments and build up of equity needed to meet the
> continuing property value write downs.
>
> Then we have the case of "Telecom" and "INL" who are pouring a large
> slice of their monopoly profits into the integrated technology
> convergent dream of:
>
> 'news on line'/'satellite television'/'3G phone networks'.
>
> The talk is that this is the way of the future.   But as it stands
> today these three 'pillars of tomorrow' are gigantic sinks of red
> ink.
>
> Then we have "Goodman Fielder", our 'staple' producer of
> margerine, flour and bread.  People keep buying the the stuff but the
> price wars for market share continue, and profit margins remain
> slim.
>
> And as for financial services, we only need to look at AMP insurance
> to see what can happen if a big financial institution gets its risks
> wrong.  (although in fairness to AMP they now seem to have extracted
> themselves from the GIO debarcle).
>
> So I think the  answer to your question must be 'individual share'
> based rather than 'sector' based.
>
> I'll stick my neck out and pick a couple of individual companies
> from these traditionally defensive sectors:
>
> Property:  Auckland International Airport, Port of Lyttelton
> Utilities:  United Networks, Telstra
> Food:  Restaurant Brands, Montana
> Financial:  Westpac Trust, Sky City Casino
>
> You might also note that many of these are trading at 3-4 year highs.
>
> So although I would class them all as to some extent 'defensive',
> this is not to say that the share price of the any of the above won't
> fall in the short term.   Given a longer term perspective though, I
> would class all of the above as 'safe' (if you can use that word
> at all with individual shares) bets.
> SNOOPY
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> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
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> "A: Four.  Calling a tail a leg doesn't make it a leg."
>
>
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