Deloitte South Island Index holds off the autumn chills to achieve modest growth
South Island listed firms market capitalisation grew 2.8% in the quarter to 30 June 2017
The Deloitte South Island Index has endured the cooler economic climate continuing to achieve modest growth. South Island listed firms collectively grew $543.6 million (2.8%) in market capitalisation for the second quarter of the 2017 calendar year.
Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says it was good to see the Index continue to grow following a strong start to the 2017 calendar year.
“Despite a slowdown in investor sentiment, the medium sized companies on the Index still managed to achieve modest growth. Historically, we have seen the results in the second quarter of the year go into hibernation and this quarter’s result is suggestive of that trend. However, it is pleasing to see that outside of the big three companies on the Index the next tier of companies have continued to perform, a good sign of resilience from the backbone of the economy in the Mainland,” says Mr McClay
“In particular, strength from the Primary sector, driven by the likes of Blue Sky Meats, New Zealand King Salmon Investments, PGG Wrightson and Synlait Milk, was a highlight of the latest quarter,” he adds.
While the Deloitte South Island Index’s quarterly gain of 2.8% was reasonable, it was outperformed by both the S&P/NZX 50 Capital Index and the Dow Jones, which grew by 5.1% and 3.3% respectively over the same period. Conversely, the ASX All Ords saw a 2.4% decline over the quarter.
The collective growth of the Index’s top three companies for the quarter ending 30 June 2017 was $108.0 million (0.8%). This positive overall result was achieved due to Meridian Energy’s strong quarter while both EBOS Group and Ryman Healthcare both suffered declines, dropping by $113.9 million (4.1%) and $60.0 million (1.4%) respectively.
The smallest 10 companies on the Index also saw a decline as they collectively fell by 11.3%.
Outside of the top three, the Index’s best performers in the quarter in terms of market capitalisation were Synlait Milk (up $138.1 million), Skyline Enterprises (up $102.1 million), Heartland Bank (up $77.7 million) and New Zealand King Salmon Investments (up $41.4 million).
After the declines of EBOS Group and Ryman Healthcare, the next largest falls in market capitalisation for the quarter were Pacific Edge (down $27.8 million), Scales Corporation (down $19.8 million) and Syft Technologies (down $16.1 million).
Syft Technologies is the newest participant on the Deloitte South Island Index, after joining the Unlisted share trading platform in April 2017. The addition of Syft Technologies increases the number of companies on the Deloitte South Island Index to 31.
Four of the seven sectors posted positive movements in the quarter to 30 June 2017. The Primary sector led the way with a gain of 10.1%, followed by the Other sector increasing by 9.2%. Excluding the impact of the top three companies (Meridian Energy, Ryman Healthcare and EBOS Group), all sectors except the Biotechnology sector achieved growth in the quarter.
To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.