F&P Healthcare shares fall on US changes

05:30, Jan 31 2013

The New Zealand sharemarket raised the bar again today, gaining another 5.1 points to hit 4252.64 despite unfavourable news for Fisher & Paykel Healthcare.

In early trading this morning the market lost two points but recovered to finish the day up 0.12 per cent.

Oceana Gold Corporation led the gainers while Fisher & Paykel Healthcare headed the decliners after news out of the United States that a new competitive bidding process would be used to cut costs on state-funded Medicare contracts.

The new prices were expected to save an average of 45 per cent on products including walkers, wheelchairs, oxygen equipment, hospital beds and prosthetics.

F&P Healthcare dropped 4 per cent to $2.38 on the news, reflecting uncertainty around what the change will mean for the health care product maker's profits, said Goldman Sachs & Partners institutional broker Peter Sigley.

"The outcome of competitive bidding in the US was worse than anticipated by the market so we saw both F&P Healthcare and [international competitor] ResMed sold down reasonably aggressively," said Sigley.

"There's a reasonable level of uncertainty about exactly what exposure the company does have to it - the direct exposure is not massive but it's more about the impact on overall pricing in the market."

On the NZX50 Index 15 stocks were up, 15 were down and 15 remained unchanged.

Of the gainers Oceana Gold was up 3.8 per cent to $3.26, Restaurant Brands gained 1.8 per cent to $2.81, and New Zealand Oil and Gas was up 1.7 per cent to 91 cents.

On the downside, F&P Healthcare was followed by Infratil down 2 per cent to $2.46, Telstra Corporation down 1.9 per cent to $5.71, Ryman Healthcare down 1.7 per cent to $4.61, and Tower down 1.5 per cent to $1.93.

On the currency markets the kiwi dollar was down on its position of US83.71 cents at 5pm yesterday to US83.48 cents at 5pm today.

DirectFX currency adviser Sam Coxhead said Reserve Bank Governor Graeme Wheeler's "hawkish" statements surrounding an unchanged OCR announcement this morning caused the dollar to fall back.

Coxhead said Wheeler's reference to the housing market and the high dollar's impact on both the export and import sector had influenced trading across the day and would continue into the night.

"We have backed off from the highs but the kiwi dollar have made good in-roads against the Aussie dollar which has just broken down through US$1.04," said Coxhead.

"I think the kiwi dollar is going to be dragged lower by the Aussie against the US dollar and we're probably up towards the high against the Aussie at the moment."

He believed the kiwi dollar would range between US82.80 cents and US83.80 cents overnight, with a bias to the downside.

On the crosses at 5pm the kiwi dollar traded at 80.30 Australian cents, up from 79.94 yesterday, and at 75.83 Japanese yen, down from 76.07 yen yesterday.

The kiwi was trading at 61.49 euro cents at 5pm, down from 62.05 at 5pm on Wednesday, and was at 52.80 pence, down from 53.13 yesterday.

The Trade Weighted Index against major trading partners' currencies was at 75.20, down from 75.30 yesterday.

The 90 Day Bank Bill rate was at 2.71 per cent, up slightly from 2.7 per cent yesterday.