The latest swarm of Christchurch earthquakes has prompted speculation that the lead rebuilding work contractor, Fletcher Building Ltd, might be considering further downgrades.
Following Fletcher's own outlook and profit warnings and noting the risk of further downgrades, going back to October, and subsequent brokers' downgrades in November, there has followed a slew of weak construction data, indicating the full and positive impact of rebuild activity might not be felt until work gets get under way about the end of the year.
Over the past nine months, more than $2 billion in value has been shed from Fletcher shares, which last week hit their lowest price in almost three years at $5.78; since retracing more than 7% to trade around $6.23 yesterday.
Craigs Investment Partners broker Peter McIntyre said while Fletcher Building Ltd had not released any information through the stock market, the latest series of quakes to hit Christchurch was bound to prompt speculation on the possibility of another downgrade.
"Fletcher's will catch the work, but it is becoming a matter of when as the timing gets pushed out with each new swarm of quakes," he said.
Many buildings must be reassessed after every large subsequent quake, he said.
He noted residential construction consents for the country were at 30-year lows and the complications in the euro currency crisis and sovereign debt issues were also holding off investment decisions.
