Stocks to watch: New Zealand equity preview

Thursday 13th November 2008

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Stocks in the US tumbled, sending the Dow Jones Industrial Average down 4.4%, after the US Treasury quit plans to buy toxic mortgage assets with the government rescue package and retailer Best Buy said it faces the worst trading conditions it has ever seen. Oil dropped to a 21-month low and the kiwi dollar declined to a two-week low.

Air New Zealand (AIR): Qantas is reducing its services in New Zealand. While it isn't confirming the exact amount, the New Zealand Herald reported it will reduce domestic flights by 25% by the end of January.

Its budget airline, Jetstar has applied to fly domestically in New Zealand. The shares were at 88 cents yesterday and have declined almost 55% the year.

Fisher & Paykel Appliances (FPA): The maker of fridges, freezers, ovens and washers reports first-half earnings today. Last year, a high New Zealand dollar concealed local currency sales growth. Since then, the kiwi has dropped 27% against the US dollar but the company said in August it may post a loss of up to $10 million on costs of new plants overseas and falling demand. The stock rose 0.7% to $1.37 yesterday and has tumbled almost 60% lower this year.

ING Property Trust (ING): The trust yesterday announced the unconditional sale of a property on Newton Road, Auckland, for $3.7 million, which is 97% of its March 31 book value, it said. The trust is selling non-strategic assets to repay debt. The shares rise 1.6% to 62 cents yesterday.

New Zealand Oil & Gas (NZO): Crude oil fell to the lowest level since January 2007 amid expectations the International Energy Agency will cut its estimate for global demand next year, while US stockpiles of fuel may be rising. Crude oil for December delivery fell 5.2% to US$56.24 a barrel on the New York Mercantile Exchange and earlier reached US$55.94. NZOG shares traded at $1.27 yesterday and is up 10% this year.

Pike River Coal (PRC): The coking coal miner's shares touched 96 cents yesterday before closing at NZ$1, the level they were sold at in the 2007 IPO. The stock has declined on signs of ebbing demand from steel mills for iron ore. Australian coal miners Centennial Coal and Macarthur Coal both dropped more than 10% on the ASX yesterday.

Xero (XRO): The online accounting software company is well positioned to expand internationally from its New Zealand base as the low cost operator in its market sector, the company said in its annual report yesterday. A global version of Xero will allow the company to "substantially broaden its market" during the next 12 months, it said. The stock last traded on November 10 at 79 cents and has gained 5% this year, while the NZX 50 dropped 30%.

By Jonathan Underhill

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