Stocks to watch: New Zealand equity preview

Friday 5th December 2008

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

Themes of the day: Trading banks in New Zealand lowered their floating and short-term fixed mortgage rates after the central bank cut the official cash rate yesterday. SBS Bank, based in Invercargill, cut its variable rate by 195 points to 7.2%. South Canterbury Finance yesterday said it sold all of its $100 million of secured bonds without the need for a public pool.

Contact Energy (CEN): State-owned Genesis Energy plans to hike electricity prices in Wellington by up to 17%, eclipsing the 10% increase for which Contact was roundly criticised in October. Contact's stock is currently at $6.99, having fallen almost as low as $6.25 last month.

New Zealand Oil & Gas (NZO): Crude oil fell below US$44 a barrel as the prospects of a prolonged slump in the world’s biggest economies, curbing demand for fuel. The price of oil may slide below US$25 a barrel in 2009 should the global downturn drive China’s economy into recession, according to a Merrill Lynch report. Crude oil for January delivery fell 6.2% to US$43.89 a barrel in New York. NZOG shares were unchanged at $1.28 yesterday and have gained 10% this year.

PGG Wrightson (PGW): The rural services company’s finance arm yesterday said it had concluded the sale of $100 million of secured bonds. PGG Wrightson Finance chief Mark Darrow said demand for the bonds “has been a strong expression of confidence in the Company”. The shares fell 5.2% to $1.45 yesterday and are down 13% in the past month.

Sanford (SAN): The fishing company’s stock is the stand-out performer on the NZX 50 this year, gaining 28%. Sales rose about 19% in the year ended Sept. 30. Still, the company last month said customers were under pressure to cut inventories and prices may fall for species with ample supply. The stock rose 1.9% to $5.40 yesterday.

Tourism Holdings (RHL): The tourist operator with a fleet of campervans is the worst performer on the NZX 50 Index this year, falling 71%. Last month the company predicted a drop in profit this year from 2008’s $14.3 million. The stock fell 1.4% to 70 cents yesterday.

By Jonathan Underhill

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