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Stocks to watch: New Zealand equity preview

Tuesday 28th October 2008

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

Themes of the day: The New Zealand dollar fell to its lowest level against the US dollar in more than five years and weakened against the yen as the prospects of a global recession prompted investors to repay loans in Japan's currency. Stocks on Wall Street had a late sell-off, with the Standard & Poor's 500 Index dropping 3.2%.

Contact Energy (CEN): The biggest utility on the NZX fell 2.4% to NZ$6.85 on Friday, a day after shareholders voted on increasing the pool of their fees, with help of majority owner Origin Energy. The fee hike, which existing directors won't take up immediately, comes after the electricity and gas company raised fees by 10%, prompting concern it may face a customer backlash. Forsyth Barr estimates the utility could lose 5% of its retail customers, according to an NZPA report.

Fisher & Paykel Healthcare (FPH): The appliances manufacturer tends to benefit when the New Zealand dollar weakens as the majority of its revenue is derived in US dollars. The stock traded at NZ$3.01 on Friday and has gained 4% in the past month.

Fletcher Building (FBU): The owner of the Formica brand slid to a three-year low of NZ$5.80 on Friday, bringing its decline this year to 50%. US government figures yesterday showed home purchases unexpectedly rose 2.7% in September, against expectations of a decline.

New Zealand Oil & Gas (NZO): Crude for December delivery fell 1.4% to US$63.22 a barrel on the New York Mercantile Exchange. Oil has slumped 57% from its July record of US$147.27 a barrel. NZOG gained 3.4% to NZ$1.22 on Friday.

NZX (NZX): The stock market operator today said the Bond Exchange of South Africa, of which NZX owns 22%, received an unsolicited takeover offer from the Johannesburg Stock Exchange. The takeover offer is at a 23% premium to the valuation at which NZX acquired its shares on October 6, 2008, it said in a statement. The stock traded at NZ$6.04 on Friday and is down 32% this year.

Telecom (TEL): Interests associated with Commonwealth Bank of Australia reduced their holding in the phone company to 5.9% from 6.9%. The shares traded at NZ$2.31 on Friday and are down 45% this year.

By Jonathan Underhill

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