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Stocks to Watch: New Zealand equity preview

Monday 13th October 2008

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

Themes of the day: New Zealand will get a retail bank deposit guarantee for lenders who opt in to a government scheme, supported by the Reserve Bank and Treasury Department. Australia aims to introduce similar measures. European leaders yesterday agreed to guarantee bank borrowing and prevent lenders from collapsing. Finance chiefs of the Group of Seven nations in Washington have vowed to take what ever measures necessary to support the financial system. The Dow Jones Industrial Average fell 1.5% on Friday. The New Zealand dollar rose to 60.25 US cents from about 59.50 US cents on Friday in New York. Crude oil fell to its lowest level in a year amid prospects of a global recession.

Contact Energy (CEN): Craig Brown, fund manager at ING New Zealand in Auckland, cited Contact Energy as a company that should weather the crisis better than most. The utility fell 1.4% to NZ$7.20 on Friday and has fallen 10% this year, less than half the benchmark index's decline.

Ebos Group (EBO): The medical equipment distributor said investors elected to retain 76% of the shares issued under its profit distribution plan, leaving 24% who elected to have the shares bought back by the company at NZ$4.352985 apiece. The stock fell 6.6% to NZ$4.10 on Friday and has declined 20% this year.

Fisher & Paykel Healthcare (FPH): The maker of medical equipment gets most of its sales in US dollars and benefits from a weaker New Zealand currency. The kiwi dollar traded below 60 U.S. cents on Friday. F&P Healthcare stock fell 1.3% to NZ$2.96 on Friday, trimming its gain in the past three months to 25%.

Fletcher Building (FBU): The stock is rated a "buy" or "outperform" by nine of 11 analysts who follow the stock, according to Reuters data. It trades at a P/E of about nine, versus Australian rival Boral Ltd.'s 14 times earnings. Fletcher's stock fell 8% to NZ$5.86 on Friday, bringing its decline this year to almost 50%.

Motor Trade Finance (MTF): The cooperative plans to transform into an investor-owned company with more capital, able to meet the central bank's supervisory requirements. The new capital won't displace the terms and conditions of its existing preference share holders, it said. The proposal will be put to cooperative shareholders at a meeting on October 29. Its 9.42% perpetual shares were last at 81 per NZ$100 face amount.

New Zealand Oil & Gas (NZO): Crude oil for November delivery fell 10% to US$77.70 a barrel on the New York Mercantile Exchange on Friday, heading down to almost half its record level of US$147.27 a barrel reached in July. The stock traded at NZ$1.16 on Friday and has declined 24% in the past month.

NZX (NZX): The manager of the New Zealand stock exchange fell 5.4% to NZ$5.83 on Friday and is down 15% in the past month. The daily average value of trade through the NZX fell 8% to NZ$117 million last month. Some 30% was sliced off the value of equities.

Turners & Growers (TUR): Workers belonging to the National Distribution Union took a lightning strike on Saturday morning in support of their pay claims with the fresh produce wholesaler. The stock last traded on October 7 at NZ$1.80 and has declined 18% this year, less than the NZX 50 Index's 27% slide.

By Jonathan Underhill

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