Monday 21st June 2010
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The week starts with good news for AMP in regards to its AXA bid, and also Air NZ on the back of its latest passenger volume numbers; but not so good for South Canterbury Finance. Also the market will keep a close eye on GPG this week after news its plans to split the company into two.
Themes of the day: In a busy week for domestic economic data, the balance of payments on Tuesday and gross domestic product on Thursday may be a closest watched. The annual current account gap probably narrowed to $4.9 billion in the first quarter from $5.5 billion. GDP may have slowed to a quarterly pace of 0.5% from 0.8%.
China said it would allow a more flexible yuan, a sign that it may be preparing to end the currency’s two-year-old peg to the US dollar, a source of trade tension with the U.S. The announcement may spark a rally in Chinese shares. The Standard & Poor’s 500 Index climbed 0.1% on Friday in New York, rising 2.4% for the week.
Auckland International (NZX: AIA ): The company said on Friday said it would take a one-time $80 million charge against its earnings because of Budget tax changes removing the ability to claim depreciation on buildings that rise in value. The shares rose 1.6% to $1.93 on Friday.
Air New Zealand (NZX: AIR ): On Friday the airline reported a pickup in passenger volumes last month and an improvement in its load factor, driven by growth in domestic routes where the national carrier is planning to add capacity. The shares rose 1.7% to $1.17 on Friday.
AMP (NZX: AMP ) AMP has been granted Commerce Commission clearance to buy the Australasian operations of AXA Asia Pacific Holdings . Commission chairman Dr Mark Berry said it was satisfied that the proposed purchase would not be likely to have the effect of substantially lessening competition in any of the affected markets. AMP shares traded at $6.96 on Friday.
Fletcher Building (NZX: FBU ): The outlook for Fletcher and other construction companies will remain challenging this year before recovering in 2012, said Forsyth Barr analyst Rob Mercer, according to the ShareChat website. He advises clients to accumulate the shares. The biggest near-term issue for builders is a shortfall of major construction projects for 2011, Mercer said. The shares fell 0.9% to $8.14 on Friday.
Guinness Peat Group (GPG): The investment company rose 1.6% at 64 cents on Friday, paring a week of declines as investors reacted to news that it was looking to spin off its Australian assets into a separate listed entity. “GPG is moving on emotion rather than fundamentals,” said Rickey Ward, domestic equities manager for Tyndall Investment Management. “I haven’t come across one person who thinks it’s overvalued - it’s undervalued.”
OceanaGold (NZX: OGC ): The operator of the Macraes gold field, whose shares have soared 244% in the past 12 months, may benefit from the advance in the price of gold, which rose to a record US$1,261.90 an ounce on Friday. The shares rose 2% to a record-high close of $4.69 on Friday.
Pulse Utilities (NZX: PLU ): The smart metering and electricity software company, said on Friday it has raised $1 million by placing 2.1 million shares at 50 cents apiece for general working capital. The funds will be used as the company “continues to rapidly develop its retail electricity business,” it said in a statement today. The shares last traded at 45 cents and have dropped 36% in the past 12 months.
Telstra (NZX: TLS ): Australia’s largest telco has signed a non-binding financial heads of agreement to participate in the rollout of Australia’s National Broadband Network. The transaction would see Telstra progressively migrate its voice and broadband traffic from its copper and cable networks to NBN’s network as it is rolled out. If completed, the transaction would deliver to Telstra a post-tax net present value of approximately A$11 billion. On Friday its shares dropped 13 cents on NZX to finish at $3.80.
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