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Stocks to watch: Small stocks in spotlight

Friday 22nd October 2010

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Some of the smaller stocks are in the spotlight today including Xero, after it made announcements around its US operations, Scott Technology, which featured in Daily ShareChat and Allied Farmers. Meanwhile readers have plenty to say about AMP Office's changes and Pike River Coal.

Themes of the day:Wall Street extended its recent rally, bolstered by economic data and better-than-expected results from companies including McDonalds and Travelers.

In late afternoon trade the Standard & Poor’s 500 Index rose 0.2% to 1,180.26. In the US, new claims for jobless benefits declined by less than expected and manufacturing in the Philadelphia region softer than forecast, underpinning expectations of more Federal Reserve monetary policy easing next month.

The New Zealand dollar was last trading at 74.63 US cents this morning, down from 74.92 US cents last night. International attention on the problems with The Hobbit production in New Zealand are casting the country’s labour relations environment in a negative light for international investors. 

Air New Zealand Ltd. (AIR): The airline, whose air cargo business is the subject of investigations or proceedings in New Zealand, Australia, the US, and the European Union, is trying to block a bid from America's Justice Department to hold up depositions for a further five months after the investigator objected to Air NZ taking evidence from witnesses from other airlines. Shares rose 2.3% to $1.34 yesterday. 

Allied Farmers (ALF): Investors holding the listed perpetual bonds of Allied Nationwide Finance won’t get their money back, as the securities are not covered by the government’s guarantee. Receiver Andrew Grenfell of McGrathNicol said in his first report that the $13.5 million in bonds were subordinated, unsecured debt and not eligible for the retail deposit guarantee. However, some 4,500 debenture and deposit holders with $128 million invested are covered by the guarantee. Shares rose 40% yesterday to 2.1 cents. 

AMP NZ Office Trust (APT): The investor in prime office space rose 2.6% to 79 cents after unit holders shrugged off a bid by shareholder Accident Compensation to dump the manager, and voted in favour of restructuring the unit trust into a company. Between 81% and 83% of shareholders supported the resolution to convert ANZO into a company and introduce a new fee for manager AMP Haumi Management Ltd. ANZO will suspend trading in its shares next week and will corporatise its structure from November. 

Pike River Coal (PRC): The coal miner fell 2.9% yesterday to $1.02, with ING New Zealand’s Craig Brown saying the stock was still reaping some of the backlash from investors after it cut is production forecast for the year to between 320,00 and 360,000 tonnes from about one million tonnes of saleable coal. 

Scott Technology Ltd. (SCT): The manufacturer’s earnings prospects are improving but uncertainty on sustainability is likely to limit share price performance according to broker McDouall Stuart, quoted on the ShareChat website. The company is expected to feel the brunt of the strong New Zealand dollar, with 89% of its revenue generated from offshore markets, although the strong Euro will help offset this. Shares were unchanged yesterday at 40 cents.

Xero (XRO): PayPal co-founder and Facebook board member Peter Thiel has agreed to invest $4 million to support the accounting software maker’s expansion into the US market. He will also join Xero’s US Advisory Board. Shares fell 0.7% yesterday to $1.49.

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