Yovich & Co. Weekly Update - 21 January 2013
Jan 21, 2013 | Commentary
This Week's Themes
- The New Year rally continued last week
- The New Zealand Index traded through 4200 on Thursday, the first time since October 2007. Fletcher Building was a stand out with a move of 5% as momentum gains on the Christchurch Rebuild.
- The consumer price index (CPI) fell unexpectedly by 0.2 percent in the last quarter of 2012. This has raised the possibility of either a central bank interest rate cut or a longer period of current historic low interest rates.
- The Aussie market was buoyed by the possibility of further interest rates cuts.
- The S&P 500 hit a new 5 year high with better than expected employment data and good banking reports spurring investors further.
- The Kiwi continues to trade just below 84 US cents, the top of the range over the past year.
Argosy Property (ARG.nz) – Last week, Argosy confirmed the agreement to lease the newly acquired property at 15 Stout St has now been signed with the Crown and settlement is expected to occur in early March 2013. The other newly acquired building in Wellington, NZ Post House, is also expected to settle at around the same time. These two acquisitions have increased Argosy’s exposure to Office type properties from 29% to 41% and to Wellington from 12% to 27%. To fund these acquisitions, Argosy has raised capital by private placement last December and offered existing shareholders a Share Purchase Plan at a price of 88 cents. At the current share price of 91 cents, we view the offer to buy shares at 88 cents as fair and presents a good opportunity for clients looking to get a larger exposure to the domestic property market.
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