The market really seems to have forgotten the bad economic news, credit liquidity and recession in New Zealand over the last week or so.
No stocks more so than Sky City Entertainment [SKC] and Telecom NZ [TEL] and Fisher and Paykel Healthcare [FPH].
Sky City was up around 25% from its lows in the first week of July, Telecom has risen a similar percentage and Fisher more than 35% off its lows.
Telecom is a weird one, there is no material reason for its share price increase, perhaps the coming profit announcement,to be made Friday morning 8 Aug 2008(NZ time), got the overseas buyers scooping up shares for the dividend. Analysts expect around NZ$700 million for the full year 2008, but its 2009 profit of sub-$600 million will not excite the punters. Its long term outlook is not good.
Fisher and Paykel Healthcare started rising before the market as a whole did when the kiwi/US dollar cross started going in the company's favour. Every cent in decline against the US dollar means around NZ$ 2.5 million straight to the bottom line. The increase in share price is quite understandable then.
Fisher & Paykel Healthcare
I actually intended to write this post just about Sky City Entertainment but got sidetracked as I often do. So here goes.
The rise in this stock started before the general market improvement as well. From a low of NZ$2.90 just four weeks ago to close at $3.62 today.
This stocks prospects haven't improved materially due to any known factors apart from the Aussie cross with the Kiwi dollar improving their Australian Casino returns back to their New Zealand currency base.
The new CEO Nigel Morrison, has a reputation for cutting corporate fat and he has done some already. Strikes last weekend from the Auckland Casino floor staff because of a 4% wage rise offer didn't move management to make a higher counter one to get them back.
A 25% rise might indicate a good profit result to the year ended June 30 2008, due Monday 25 August 2008 (NZ time). This sort of movement in price before such announcements is common with this stock on good news.
Insiders should be ashamed.
I think SKC has been oversold though, like many other listed NZX stocks have.
Having said that I still fail to understand the collective amnesia that seems to envelop the stockmarket when they forget the reasons why they sold over the last few months and are now buying stocks as their share prices go in an upwards trajectory, on higher volumes traded.
Disclosure I own FPH & SKC shares.
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