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Stocks to watch: Weaker dollar boosts Kathmandu

Wednesday 27th October 2010

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Themes of the day:

Shares on Wall Street were mixed as disappointing third-quarter corporate results from US Steel offset improved consumer confidence. In late afternoon trade the Standard & Poor’s 500 Index was flat at 1,185.64. In Europe, the Stoxx 600 fell 0.2% to 266.92 at the close. Australia is set to release third quarter consumer inflation data today, which is seen as a key factor that will influence the Reserve Bank of Australia’s rate announcement in November. The New Zealand dollar fell amid heightened uncertainty over the size of the Federal Reserve’s second round of asset purchases next week, and was last trading at 74.83 US cents from 75.18 cents yesterday.

Kathmandu (NZX: KMD ) rose 3.3% yesterday to $1.90, leading gainers on the NZX as the kiwi dollar weakened against its Australian counterpart, creating an arbitrage opportunity between its shares on the ASX and NZX.

L&M Energy (NZX: LME ) increased gas reserves at its western Southland basin permit 60% to 274 petajoules, following an independent resource reserve review. Shares rose 7.1% yesterday to 13.5 cents.

New Zealand Oil & Gas (NZX: NZO ): Crude oil rose above US$82 a barrel mark overnight, boosted by improved US consumer confidence numbers. US crude for December rose 20 cents at US$82.72 a barrel by 12.02pm EDT, extending gains from two previous sessions. Shares in the energy exploration and production company rose 1.5% yesterday to $1.29.

Nuplex Industries (NZX: NPX ): The stalled economic recovery in Europe, Australasia and the US is expected to weigh on the company, said Aegis Equities Research analyst Nachiket Moghe, quoted on the ShareChat website. High demand from China and the Asia Pacific region is likely to be offset by high exchange rates in Europe and Australasia and a rising oil price, he said. Shares fell 0.3% yesterday to $3.37.

NZX (NZX: NZX ): Shares in the securities market operator rose 2.6% yesterday to $1.59, a day after Australian rival ASX soared 19% on the back of a takeover offer at a steep premium from the Singapore stock exchange. “ASX has been valued on very high multiples and that’s rubbed off for some investors in NZX,” said Grant Williamson, a broker at Hamilton Hindin Greene.

Ports of Tauranga (NZX: POT ): Said it is well-positioned to accommodate bigger container ships expected to visit the country in the near future. The company has already filed its plans for dredging to deepen its harbour, and capacity at the Sulphur Pt cold storage facility was being increased by 70%. Shares were unchanged yesterday at $7.25.

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