Stocks to watch: New Zealand equity preview

Thursday 29th January 2009

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

Themes of the day: Reserve Bank Governor Alan Bollard cut the official cash rate a greater-than-expected 150 basis points to 3.5%, saying "the news coming from our trading partners is very negative" with the global economy in recession. Further cuts to the OCR were possible though they wouldn't be of the same magnitude, Bollard said. New Zealand's dollar tumbled after the statement and was recently at 52.25 US cents, having slumped as low as 51.83 cents. Stocks on Wall Street rallied overnight.

Australia & New Zealand Banking Group (ANZ): Bank stocks rallied in the US and Europe yesterday on optimism the US government will step up efforts to restore order to financial markets. Citigroup jumped 15%, helping lift the Dow Jones Industrial Average up 2.1%. Lloyds Banking Group soared 50% in London, leading a rally in European financial stocks. ANZ Bank climbed 4.8% to $16.25 yesterday and Westpac Banking Corp. rose 2.7% to $19.10.

Fletcher Building (FBU): The nation's biggest construction firm may gain after the central bank slashed the OCR more than expected, which may help revive demand for housing as mortgage rates fall. Fletcher dropped 4% to $5.48 yesterday and has declined 45% in the past 12 months amid as a downturn in housing hurt sales in its biggest markets of New Zealand, Australia and the US.

Yesterday, Australian rival Boral cut its 2009 profit forecast by 40%, citing weaker demand in the US and Australia. The S&P/Case-Shiller 20-city index, a measure of house prices in the biggest US metropolitan areas, fell 18.2% in November from the same month of 2007, a record drop for the eight-year-old index, according to a report yesterday.

NZX (NZX): The manager of the New Zealand stock exchange said today it is in advanced talks to sell its wholly owned registry business TZ1 Registry to Markit, a global financial information services company headquartered in the UK. The acquisition is expected to complete in the first quarter of 2009, subject to relevant board approvals and completion of bilateral due diligence, it said. The shares fell 6 cents to $4.83 yesterday.

Sanford (SAN): The biggest fishing company on the NZX 50 told shareholders at their annual meeting yesterday that trading results should improve this year, reflecting lower fuel costs and a weaker kiwi dollar. "While there is still a reasonably degree of uncertainty in most of our markets, there are signs that the uncertainty at least is easing," managing director Eric Barratt said. Shares of Sanford last traded on January 27 at $5.40 and have climbed almost 40% in the past 12 months, the best performance on the benchmark index.

Satara Cooperative Group (SAT): New Zealand's biggest kiwifruit and avocado group elected Hendrik Pieters as chairman to replace Andrew Fenton, who is retiring after 18 years in the role. Pieters is also currently a director of Kiwifruit New Zealand, the body with regulatory oversight of kiwifruit exporter Zespri International Limited. The NZAX listed shares last traded on October 30 at 90 cents and was last bid at 75 cents.

By Jonathan Underhill

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