"Some major New Zealand stocks, such as SkyCity, have seen share prices hit. The downwards pressure is magnified when local institutional investors already have full weightings in these stocks."
While the deteriorating local economy and pressure on the currency were seen as reasons for the exit, some international investors were reducing exposure in what they perceived to be relatively illiquid markets, such as New Zealand, as they faced pressure on several fronts, he said.
Highly-geared companies, and those with complex capital structures and upcoming debt roll-overs also continued to be out of favour.
Although SkyCity had a high level of gearing on a traditionally measured basis, its balance sheet was sound in terms of interest rate management and the length of time to debt roll-over dates.
It was unlikely the company would need to cut its 90% dividend payout policy in order to lower debt levels, Mr Lister said.
"We continue to expect medium-term operational upside from a tighter focus on capital and costs and successful leveraging off a refurbished Auckland casino that has the worst impact of full smoking bans and regulatory changes behind it."
SkyCity's successful Darwin casino was being expanded and a strategic review was under way at the Adelaide casino.
The company had not performed to potential in recent years but Forsyth Barr remained positive about the ability of a new senior management team to turn around the corporate culture, he said.
SkyCity shares last traded at $3.34.
Forsyth Barr values the company at $4.67 a share.
SkyCity
SkyCity Entertainment group is a major tourism and leisure company in New Zealand and one of the largest gaming operations in New Zealand and Australia.
Major assets: Large casino operations in Auckland, Adelaide, Hamilton and Darwin and a large New Zealand cinema chain.
