In the backdrop of a flight-to-safety response prompted by turmoil in global credit markets, the losses of the Kiwi dollar against the greenback have reached 11 percent over the course of two weeks.
Headlines
Fisher & Paykel Appliances Relocates Production To Thailand For Cost-Savings
Fisher & Paykel Appliances Holdings Ltd., the New Zealand home appliance maker that has shifted factories overseas because of the high currency, plans to relocate another plant to Thailand. The company expects to save at least NZ$6 million ($4.3 million) a year from the relocation of a plant that makes circuit boards for washing machines and clothes dryers.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aD83XPwiz1as
Source: Bloomberg
Rising Cost of Land Acquisition Responsible for Inflation in New House Prices
The rise in land values has been the major driver in the growing cost of building new houses, the Registered Master Builders Federation says. It has singled out inadequate land supply as the major cause and is calling on the government to do what it can to free up land.
http://www.stuff.co.nz/4164708a13.html
Source: Stuff.co.nz
NZSX-50 Index Plummets to 8-Month Low
The New Zealand share market dropped heavily today as Wall Street wobbled again today and the top 50 index fell to a low for the year. The benchmark NZSX-50 index fell for the fourth consecutive session and by noon was down 52 points, or 1.3 per cent, to 4013 – its lowest level since mid-December last year
Source: The New Zealand Herald
Market Activity
Currency Market - NZD:
In the backdrop of a flight-to-safety response prompted by turmoil in global credit markets, the losses of the Kiwi dollar against the greenback have reached 11 percent over the course of two weeks. New Zealand?s currency is particularly vulnerable to bouts of risk aversion since the Kiwi?s unprecedented rise to fresh post-float highs stemmed from low-volatility conditions that drew investors towards carry trades. Selling pressure escalated after US retail giant Walmart reported disappointing earnings forecast and yet another US investment firm blocked redemption of funds. The New Zealand dollar slid for the fifth consecutive session, past the key psychological level of 0.7200 USD, to close down 1.55 cents at 0.7165 USD in the Wellington session. Currency analysts speculate that the depreciation of the New Zealand dollar may be accelerated by US hedge funds that are forced to square NZD positions now that the subprime-linked components of their portfolios have been rendered illiquid.
Equity Market - NZSX-50 Index:
As domestic profit-takers and wary foreign investors shun stocks listed on New Zealand?s stock exchange, the benchmark NZSX-50 index has erased gains made earlier this year, down more than 7 percent in three weeks. New Zealand?s bourse slid down 61.2 points, or 1.5 percent, to close at an 8-month low of 4004.45 on modest turnover of NZ $ 125 million. Tremulous investor confidence in global equity markets was shaken by a double-blow from a dismal corporate earnings forecast for US retail giant Walmart and news that yet another US investment firm was blocking redemption of funds. Share prices fell across-the-board with blue chip Telecom down 2 cents to 427 and Auckland Airport down 4 cents to 306. Although the nosedive by the Kiwi dollar boosted earnings outlook for manufacturers of export-oriented companies, Fisher & Paykel Appliances slid 6 cents to 351 after the announcement of relocation of production of Thailand to reduce costs by NZ $6 million annually.
Fixed-Income Market - 10-year Government Bond Yields:
Demand for New Zealand?s government debt rose for the fourth consecutive session, in tandem with a fallout in Kiwi equity and currency markets. Yield on the benchmark 10-year government note dropped 6 basis points to 6.316 percent.
