Deloitte South Island Index posts record quarterly gain
All seven industry sectors achieved positive results in the quarter to 31 December 2015
The Deloitte South Island Index rebounded in the quarter ended 31 December 2015 posting a record quarterly gain after three consecutive quarters of challenging results.
South Island listed firms collectively increased their market capitalisation by $2,043.8 million (14.1%) in the quarter ended 31 December finishing the calendar year 17.7% higher than the end of 2014.
Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says that this record quarterly performance was spread across the board.
“After the ups and downs of the first three quarters of 2015 it was heartening to see the strong performance of the Index in the final quarter of the year. Even more pleasing is to see this growth across all sectors on the Index on the back of a strong reporting season for the Mainland companies,” says Mr McClay.
“This phenomenal quarterly performance raises hope that the tide is turning back to positive performance, however seasoned investors will be wary of the potential for this result being just a king tide. The Index’s decline of 3.5% in January, after the fall in global markets after the New Year period, demonstrates that South Island companies are not immune to global forces. However, the December quarter’s results show they are also able to take advantage when the currents flow in their favour.”
The Deloitte South Island Index’s 14.1% quarterly gain outpaced all international benchmark indices with the S&P/NZX 50 Capital Index up 12.5%, the Dow Jones gaining 7.0% and the ASX All Ords up 5.7% during the quarter to 31 December 2015.
The Index’s top performers for the quarter, in terms of the dollar value of their market capitalisation, were Meridian Energy (up $743.3 million or 13.8%), Ryman Healthcare (up $595.0 million or 16.3%) and EBOS Group (up $203.0 million or 10.8%).
“A large proportion of the considerable growth in the Index over the quarter can be attributed to these three largest companies, collectively increasing $1,541.3 million (14.1%). However, without these top three companies the remaining companies achieved a strong result collectively growing by $502 million (14.0%) and the smallest 20 companies grew by a solid $76.6 million (6.9%),” says Mr McClay.
The biggest declines in the dollar value of their market capitalisation for the quarter came from Silver Fern Farms (down $25.1 million or 16.7%), South Port New Zealand (down $8.4 million or 6.7%) and Foley Family wines (down $2.6 million or 3.3%).
In a rare occurrence, all seven industry sectors tracked by the Index achieved positive results over the quarter. The results ranged from 15.9% growth for the Property sector to 8.5% for the Biotechnology sector. After adjusting for the impacts of the big three companies in the Index (Meridian Energy, Ryman Healthcare and EBOS Group) all sectors still achieved positive outcomes.
To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex