The Deloitte South Island Index reverses course

The Deloitte South Island Index changed gears, reversing the growth achieved in the prior two quarters, in the quarter to 31 December 2018. South Island listed companies collectively saw their market capitalisation decline by $2,390.4 million (9.2%) in the latest quarter.

All the other benchmark indices tracked also recorded decreases over the same period with the Dow Jones leading the decline, decreasing by 11.8%. This was followed by the ASX All Ords Index decreasing by 9.7% and the S&P/NZX 50 Gross Index decreasing by 6.4% in terms of market capitalisation in the quarter ending 31 December 2018.

The “Top 4” companies, all with market capitalisation greater than $1,000.0 million, collectively declined by $2,017.1 million (9.7%) in market capitalisation during the December 2018 quarter.

Meridian Energy was the only Top 4 company to record an increase, gaining $307.5 million (3.7%) in market capitalisation during the quarter to 31 December 2018. Ryman Healthcare recorded the largest decline of the Top 4 in both dollar and percentage terms, falling $1,630.0 million (23.3%). While EBOS Group and Synalit Milk both declined by $363.0 million (10.6%) and $331.6 million (17.1%) respectively.

Corporate finance partner Scott McClay says the performance of the Top 4 companies on the Index in the December 2018 quarter is likely to do with global headwinds more generally.

“The decline within the Top 4 appears in part to reflect global market forces rather than specific company performances or announcements,” says Mr McClay.

The smallest ten companies on the Index collectively grew, recording a $28.7 million (21.1%) collective increase in market capitalisation in the quarter ending 31 December 2018.

Outside of the Top 4, the Index’s best performers in percentage terms were SLI Systems (up 94.1%), SeaDragon (up 61.1%) and Pharmazen (up 35.3%) during the quarter to 31 December 2018.

Conversely, the largest declines in market capitalisation during the quarter outside the Top 4, in percentage terms, were Chatham Rock Phosphate (down 28.6%), Connexionz (down 24.6%) and Kathmandu Holdings (down 17.1%).

Five of the seven sectors tracked recorded losses during the quarter to 31 December 2018, with the Aged Care sector recording the largest decline in market capitalisation decreasing 21.9%.

The Technology and Energy & Mining sectors both recorded gains for the December quarter, up 16.0% and 3.6% respectively.
During the quarter three participants were removed from the Index – Heartland Group Holdings Ltd, EnergyMad and Windflow Technology. Both Heartland Group Holdings Ltd and EnergyMad no longer predominantly operate out of the South Island and Windflow Technology was delisted from the NZX Main Board.

To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.

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