Deloitte South Island Index back on track to start 2017
South Island listed firms market capitalisation rebounded 5.6% in the quarter to 31 March 2017
The Deloitte South Island Index posted a solid quarterly performance to begin the 2017 calendar year, returning the Index to positive territory and recovering from its dismal 2016 year end.
South Island listed firms collectively grew $1,036.2 million (5.6%) in market capitalisation in the quarter ended 31 March 2017.
Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says it was pleasing to see the Index start the year in a positive fashion following the disappointing last quarter of 2016.
“The Index’ performance to 31 March 2017 seems to have been a quarter where the South Island market went back to the basics. Several companies reported positive interim and annual results during the quarter and investors responded positively to these financial fundamentals,” says Mr McClay.
“It is also notable that growth was across all sectors and, even excluding the weighting of the three largest companies, the Index performed admirably due to the support of the next tier of sizable companies. This is an indication that the Mainland economy is not purely reliant on the performance of its largest companies and a good sign for optimism in the year ahead,” he adds.
The Deloitte South Island Index’ 5.6% quarterly gain outperformed the other indices tracked. Locally it bettered the S&P/NZX 50 Capital Index, which increased 3.1%, and overseas the Deloitte South Island Index outshone both the Dow Jones and the ASX All Ords, which grew 4.6% and 3.2% respectively during the quarter to 31 March 2017.
Growth was driven by the larger companies on the Index, with nine of the ten largest companies achieving gains in the 31 March 2017 quarter. And the top three largest companies set the tone, collectively growing by $898.0 million (6.8%).
The top performer for the quarter to 31 March 2017 was Meridian Energy, with the company gaining $512.6 million (7.7%) in market capitalisation during the quarter. Meridian Energy released its interim financial result for the six months to 31 December 2016 during the quarter, reporting a third successive year of growth in interim earnings (EBITDAF) being 6% higher than the corresponding period in the previous year.
The remaining top performers for the quarter to 31 March 2017 included EBOS Group (up $235.4 million (9.3%) in market capitalisation), Ryman Healthcare (up $150.0 million (3.7%) in market capitalisation), Heartland Bank (up $92.5 million (12.4%) in market capitalisation) and Synlait Milk (up $64.8 million (11.6%) in market capitalisation).
The two most significant declines in market capitalisation for the quarter came from Silver Fern Farms and Skyline Enterprises. Silver Fern Farms decreased by $37.1 million (down 41.5%), while Skyline Enterprises underwent its second consecutive quarterly fall as it decreased by $34.1 million (4.6%).
All seven sectors posted positive movement in the quarter to 31 March 2017 – with the Manufacturing & Distribution sector leading the way with a gain of 9.2%, followed by the Energy & Mining sector increasing by 7.7%.
To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.