Stocks to Watch: New Zealand Equity Preview

Monday 26th January 2009

Themes of the day: Crude oil climbed more than 6% on signs OPEC's production cuts may be helping to underpin the price of crude. Figures showed the U.K. economy is officially in recession while some economists are winding back their estimates for China's economic growth after it reported weaker GDP. Reserve Bank Governor Alan Bollard is forecast to cut the official cash rate by 100 basis points to 4% on Jan. 29. Trading may be reduced with the Auckland anniversary day holiday, a public holiday in Australia and closures in Asia for the Lunar New Year holiday.

Australian & New Zealand Banking Group (ANZ): The bank's NZX listed stock may gain after U.S. financial institutions rebounded on Wall Street on Friday. Citigroup rose 12% and Bank of America rose 9.3%. ANZ Bank's shares fell 8.5% to NZ$14.95 on Friday, leading the NZXZ 50 lower. Westpac Banking Corp. fell 2.9% to NZ$18.70.

Contact Energy (CEN): Some analysts have wound back their ratings of the biggest utility on the NZX 50 after it said last week that higher gas costs and constraints on transmission and output could lead to a 23% decline in profit this year. The stock fell, fell 1.5% to NZ$6.66 after it was cut to 'hold' from 'buy' at Goldman Sachs JBWere following the company's warning this week that underlying earnings would fall as much as 23% this year because of transmission constraints, higher gas costs and a drop in generation.

GuocoLeisure Ltd. (GLL): The company formerly known as Brierley Investments said profit in the six months ended Dec. 31 fell about 3.3% to US$29.1 million, reflecting the depreciation of the pound and Australian dollar against the U.S. dollar. Revenue fell 32% to US$201.8 million on lower hotel and property development returns. The shares rose 2 cents to 37 cents on the NZX on Friday.

New Zealand Oil & Gas (NZO): Crude oil for March delivery rose US$2.80 to US$46.47 a barrel on the New York Mercantile Exchange on Friday. Petrologistics, an oil consultancy, said OPEC's estimated output would drop by 1.55 million barrels to 26 million a day this month, heading for the 2.2 million cut that members of the cartel agreed to last month. NZOG's stock fell 1.6% to NZ$1.24 on Friday.

OceanaGold Corp. (OGC): New Zealand's biggest gold miner and operator of the Macraes goldfield, dropped 6.3% to 45 cents on Friday as the price of gold eased. The gold miner said a jump in its stock price this month may reflect a surge in the price of gold in kiwi dollars and a Merrill Lynch report that said the company was the cheapest gold miner it covered.

Telecom Corp. (TEL): Shares of the nation's biggest phone company rose to a three-month high NZ$2.53 on Friday amid media reports some investors are underweight the stock. The shares rose 2 cents to NZ$2.53 on Friday.

By Jonathan Underhill

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