COMMENT:

The New Zealand dollar has fallen dramatically over the last few months, creating winners and losers along the way.

Since mid-April, the currency has lost about US6c or 8.1 per cent, against the greenback as concerns about a cooling local economy mount.

At the same time, the US dollar itself went on a tear, putting more downward pressure on the kiwi.

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The intrigue for foreign exchange market lies around current futures positioning, which suggests the market is a notional net $2.7 billion short kiwi, Josh Wilson senior portfolio manager at NZ Funds, said.

"This can be interpreted as speculators — hedge funds — being the most bearish they've ever been on the New Zealand dollar," he said.

The demise of the kiwi over the last few months happened too late to make a material difference for those companies with June balance dates, who will be reporting their results next month. But it is bound to warrant a mention in their earnings outlook statements for the year ahead.

After all, the kiwi up until recently has been a drag on those companies trying to derive their earnings from offshore. In broad terms, those companies should benefit from the weaker Kiwi but much will depend on each company's currency hedging arrangements.

The likely beneficiaries of a low currency are the share market's heavy hitters — a2 Milk and Fisher and Paykel Healthcare. Other primary sector stocks apple grower Scales and fishing company Sanford should also feel the tailwind of a lower Kiwi.

On the flipside, Sky TV, whose costs are mostly derived in US dollars, will probably feel the negative effects as will Air New Zealand, said Matt Goodson, managing director of Salt Funds Management.

In times of currency weakness the retailers tend to lose out as imports become more expensive, he said.

"The key themes at the moment are a slowing in the New Zealand domestic economy and some fanfare around lower business confidence," he said. "This (currency weakness) will flow through, on balance, to benefit the listed companies, but not everyone will benefit," he said.

PGW speculation

The plot thickens around PGG Wrightson (PGW), which is clearly up for sale.

The issue is around whether PGG will be sold as one unit or broken up into its constituent parts, with its substantial seeds business being the jewel in the crown.

Over the years, Australia's Elders has often been mentioned as a likely suitor for PGW and the most probable "fit".

Last month, the Aussie rural services company week poured cold water on media speculation, saying it had not made any definitive proposal to acquire PGW.

Meanwhile, Elders itself is known to be of interest to China's Hebang (Hong Kong), which last week revealed a 6.25 per cent stake.

Hebang makes glyphosate, the key ingredient for the widely-used herbicide Roundup.
PGW's share price has remained elevated, trading today at 67c, but off last month's peak of 71c.

More will be revealed when PGW company reports its annual result on August 14.

Keytone's Oz debut

Shares for Christchurch-based market minnow Keytone Dairy Corp debuted at a big premium to their issue price on the ASX yesterday.

The shares, which were issued at A20c, traded up to A35c at one point.

Keytone, founded by former Westland Milk marketing manager James Gong, makes dairy products mostly for export into China.

It raised A$15 million ($16.4m) in capital through issuing 75 million shares after an IPO last week and the offer was oversubscribed.

Keytone Dairy's facility produces commercial whole and skim milk powder as well as other dairy powder blends under its proprietary brands.

The company also contract-packs a range of powdered dairy products for supermarkets, retail chains, dairy producers and other customers, in New Zealand and China, under their private label brands.

The company holds a China Certification and Accreditation Administration (CNCA) license, a pre-requisite for importation of dairy products into the PRC.

Keytone forms part of a growing list of companies who have bypassed the NZX and cut straight to the chase with a listing on the ASX in recent times.