Jamie Gray 's Opinion

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

Stock takes: Shares under water

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NZOG shares dipped at news of lower reserves at the Tui oilfield. Photo / Supplied
NZOG shares dipped at news of lower reserves at the Tui oilfield. Photo / Supplied

Shares in NZ Oil and Gas are trading at around seven-year lows in the aftermath of news that reserves at the Tui oilfield are lower than previously thought. AWE, Australian operator of the offshore Taranaki field, which is 12.5 per cent owned by NZOG, said expected reserves from the Taranaki field have been cut by as much as a fifth, reducing the venture's total value by up to $1.43 billion.

ASX-listed AWE said gross 2P (proven and probable) reserves were likely to be 40 to 42 million barrels, rather than the 50.5 million previously reported. The past 12 months have been hard going for NZOG.

The company's 30 per cent-owned offshoot, Pike River Coal, went into receivership in the aftermath of the West Coast mining disaster that claimed 29 lives last November. The shares closed yesterday up 1c at 69c compared with their pre-Pike River price of $1.35.

RISE OF THE REDBACK

The rise and rise of the Chinese renminbi (RMB), or so called "redback", seems inevitable as the currency continues to gain traction.

Growth of the RMB as a trading currency has been accelerating during the past few years and an HSBC bank survey says the RMB is set to overtake sterling to become one of the top three trade settlement currencies this year.

The ANZ has just received approval from the Hong Kong Monetary Authority (HKMA) to settle cross-border trade transactions in RMB.

ANZ New Zealand managing director, institutional, David Green, said the pace of liberalisation of the RMB has been surprisingly rapid. "Offshore settlement of the RMB is a new and very significant step forward in the internationalisation of the RMB, allowing our customers to settle RMB transactions offshore if the transactions are for trade purposes," he said.

"China is collectively the most significant trading partner for Australia and New Zealand. As the second largest economy in the world, it is inevitable that Chinese RMB will play a much bigger role in the global foreign exchange rate market," Green said.

STAPLE DIET

Globally sharemarkets have performed dismally over the past year, but exposure to companies not affected by global economic growth or sovereign debt show that it is possible to buck the trend, according to NZ Funds Management.

Officially the bear market ended nearly two years ago but for investors it may look like it is ongoing, said chief investment officer Michael Lang.

So far this year the global sharemarket has returned 2.6 per cent, the Australian stock exchange has fallen by 4.4 per cent and the New Zealand sharemarket has eked out a 3.1 per cent return. Usually it is a high risk proposition to try to pick an individual company to buck market trends. But Lang says in some cases fundamentals have little to do with the global economic growth, or sovereign debt.

"An alternative approach is to buy a diversified portfolio of shares from a sector such as consumer staples, healthcare or utilities where the underlying business model does not depend on the strength of the economy."

Year-to-date figures show the global consumer staples sharemarket returned 7.2 per cent and the global healthcare sector 11.4 per cent.

RBNZ TAKE NOTE

Central banks around the world are getting crotchety about the effect America's and Europe's inability to get their respective houses in order is having on their own currencies.

Switzerland is not crazy about having a strong currency because, like New Zealand, it is highly dependent on exports. The Swiss National Bank has just cut interest rates and said it would increase the supply of money to markets to stem the rapid rise of the Swiss franc, which is perhaps the ultimate safe-haven currency. The franc has surged 10 per cent against the euro over the past two months as Europe's debt crisis worsened.

Rising fears about the sovereign debt crisis in Europe and the US debt burden have prompted the buying of assets considered to be safe from volatility, such as the Swiss franc, the Japanese yen and gold. Japan's Finance Minister Yoshihiko Noda said Japan aimed to stem speculative and disorderly currency moves (see story below).

While the New Zealand dollar has retreated from its post float high of US88.42c, it is still very strong and at similar levels where the bank has in the past intervened. The bank has a set of four criteria that must be met before it gets involved. At the moment, currency strategists say it is only meeting the first one, which states that the currency must be overvalued.

NEW-LOOK NZX

NZX launched a completely new web page last week after users told the company they wanted a service that was more intuitive and interactive. One of the highlights is the interactive graphs, which allow users to more accurately review historic share prices.

NZX's Rowan Macrae said most of the feedback had been positive, but there were plenty of changes users wanted to see. "A week in we've had about 400 responses, the vast majority of those were [giving] ideas for features they would like to see ... or spotting the odd bug we need to fix," she said. About 20 wanted the old site back.

Stock Takes doesn't like to grumble but there does seem to be added difficulty in tracking down information, particularly as the list of announcements is limited to just the latest five. Macrae said this had come to the attention of others as well.

- NZ Herald

Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency. He has been a business journalist for 30 years, working for NZPA and, mainly, the Reuters news agency. He enjoys fast breaking business news stories but also likes to get to the bottom of complex issues. He is driven by telling readers what is going on but also has a soft spot for the occasional quirky business story which gets people talking. He has a special interest in Fonterra.

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