KEY POINTS:
It has been a crazy couple of weeks for the New Zealand dollar and that has flowed on to an equally volatile period for the stock market.
The interest rate rise two weeks ago was also intimately entwined with both the rise of the dollar and fall in the market. There aren't very many listed companies that like to see the cost of their debt rising.
Most of the major export stocks have fallen since the start of the month.
Affco is down about 13 per cent. Fisher & Paykel Appliances has fallen 6 per cent. Pumpkin Patch (which issued a profit warning last Friday) has been hammered. It is down 11 per cent. Fishing company Sanford is also down 4 per cent.
Of the big exporters only F&P Healthcare seems to have bucked the obvious trend (see page 2).
ASB Securities head of equities Stephen Wright agrees that the rising dollar and rates have been the two big influences on the market of late.
But while export stocks have been bounced around by the volatility the parallels between currency markets and equity markets are not always clear cut, he says.
"Some days there is genuine demand for leading stocks so over time they have held up some days whether the dollar is weaker or not."
The Reserve Bank's currency intervention on Monday may have helped drive a little bit of sentiment change around currency sensitive stocks, he says.
Some have started to rebound a little.
"But then again the markets are fairly cynical."
There has been no shortage of voices in the market arguing that Alan Bollard's efforts are likely to be futile, Wright says.
There are also the usual pushes and pulls of world markets to contend with.
The 0.78 per cent NZX-50 fall on Wednesday followed a similar drop overnight on Wall Street.
So it seems there isn't really anywhere to hide from the ebb and flow of the macro-economic tides right now. Time to take a position and get ready for a wild ride in the next 12 months.
Broadcast review
Last week's item on Sky TV - sourcing a note from Citigroup analyst Kar Yue Yeo - made more of an splash than expected. It turns out that the Government's proposed broadcast policy review had not been widely publicised.
While Yeo and a few other analysts (such as Rodney Deacon at Goldman Sachs) had picked up on it as a financially material issue for Sky TV, the political world hadn't noticed this hot potato with the potential to light up talkback lines all over the nation. At the heart of the issue are the All Blacks, or more specifically, who controls the rights to broadcast their games and whether they could once again be live on free-to-air.
All of that makes for a great news story but will provide no comfort for Sky shareholders.
Given the damage done by regulatory intervention in the energy sector and (most dramatically) the telco sector in the past 12 months it is not surprising this latest review is unsettling investors.
Sky TV shares have continued to drift down from a high point of $6.24 in April. That's despite the fact that Sky TV is technically an importer (of mostly US content) and ought really to be getting some benefit from the persistently high dollar.
They closed steady at $5.55.
Healthy buzz
In yesterday's Herald there was a science story which has to be great news for listed health products company Comvita.
A German study has found that propolis - a bee product which Comvita uses as an ingredient in many of its supplements - has suppressed tumours in mice.
The researchers tested propolis against tumours that can occur in the nervous system and on skin in a condition called neurofibromatosis.
Propolis is a resin found in young tree buds. Bees collect the substance, mix it with their own enzymes and beeswax, and use this to seal the hive.
Most of Comvita's supplements and honeys have some propolis content.
Comvita shares didn't move much yesterday and while one study probably doesn't constitute any material change in value it does provide food for thought for any investors already considering Comvita. Comvita shares have risen from $2 at the start of 2006 to a high $4.05 in April. Like many exporters they have been hit hard by the currency in the past few weeks. They closed down 2c at $3.74 yesterday.
Energy levels
Every time Vector shares look like they might be threatening a return to $3-plus territory, they seem to run out of steam.
After another good run last month took them to a peak of $2.97 on May 23, they have since slipped back 29c to close at $2.68 yesterday.
There are a couple of factors that could be weighing on the stock right now, says First NZ energy analyst Jason Lindsay.
The stock is sensitive to international bond rates, given that it has a lot of overseas debt and those rates are on the rise. There is a view - put forward in a note by ANZ economists this week - that the rest of the world may soon be joining New Zealand's high-interest rate party.
The ANZ noted that US 10-year yields were now above the psychologically significant 5 per cent.
There is also that old chestnut of Commerce Commission regulation.
In August last year, Vector investors got a shock when the Commerce Commission announced it planned to take control of Vector's pricing.
The company later appeared to win a reprieve and a deal was proposed in February to change Vector's pricing structure. Accepted in principle by the commission, a final decision was expected in March - the market is still waiting. Lindsay said he was still optimistic but it was inevitable that as the process dragged on investors would grow nervous.
Breathing easier
Several investors are eyeing Fisher & Paykel Healthcare as a good currency play - an export stock which is undervalued because of the high dollar but could make big gains when the kiwi finally starts to fall - so it makes sense to keep track of its prospects for growth.
Marcus Curley, at Goldman Sachs JBWere, has done an assessment of the company's latest product, the PT100 - a home humidification therapy for chronic obstructive pulmonary disease.
COPD disorders include chronic bronchitis, emphysema and other breathing conditions.
Curley says final trial results from 12 months of testing give solid support for commercialisation of the product - without quite being a slam dunk.
The 109 patients in the trial used the device for two hours every day, and tests showed they had improved lung function and capacity to exercise.
Curley estimates the device could make US$1 billion for the company.
Based on F&P's market penetration of 10 to 30 per cent, he factors in an ebit upside of as much as $172 million by 2017 - enough to add up to $1.63 a share on a discounted cashflow valuation.
Curley retains his long-term buy recommendation and a base valuation of $4.05 a share, but says successful commercialisation of new products will add between 93c and $2.81 to that.
F&P Healthcare shares closed up 1c yesterday at $3.50.