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South Island firms' value stalls - Deloitte

ALAN WOOD
Last updated 05:00 09/08/2012

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The value of listed South Island companies has stalled, impacted by a weak global outlook and the wait for the Christchurch CBD blueprint, keeping investors on the sidelines in the second quarter.

Accountancy firm Deloitte compiles a South Island share index of 30 companies and says the companies' combined value rose $28.4 million in value, or only 0.6 per cent in market capitalisation, in the June quarter.

South Island listed companies had performed better in the first calendar quarter of 2012 when they had a gain of 7.1 per cent in market capitalisation (the total value of their shares).

The total value of the 30 companies measured by the index at June 30 stood at $4.93 billion - 3.3 per cent lower than a year ago. At the end of March the market capitalisation was $4.903b.

The increase from the March quarter was the result of a strong performance from the property sector companies, including NPT Ltd and Ryman Healthcare.

The index's top performer for the quarter was financial services firm Heartland New Zealand, gaining $42.7m or 23.4 per cent in capitalisation to a total $225.4m.

That took it past Skyline Enterprises and Lyttelton Port of Christchurch.

Top pacesetter Ryman Healthcare showed some the gains that have taken its share price to a fresh peak recently. It added $40m or 2.6 per cent to $1.585b.

Australian miner Bathurst Resources lost $110.3m to be worth $544.7m at the end of June. The 16.8 per cent decline followed announced changes to its escarpment plan for mining on the West Coast's Denniston Plateau to appease one organisation, leaving only two appellants to the project.

Paul Munro, a corporate finance partner in Deloitte's Christchurch office, said the protracted European sovereign debt crisis had continued to dominate the global economic outlook and restrain market confidence.

The South Island index fared well against other indices including the Dow Jones Industrial average, down 2.5 per cent in the quarter and the ASX All Ordinaries, down 6.4 per cent. The NZX50 was down 3.1 per cent on its March 31 position.

"Stronger than expected first quarter GDP [economic growth] results for New Zealand have signalled that the Christchurch earthquake recovery is gaining traction. Our view for companies in the Deloitte South Island Index remains positive over the medium to longer term."

The recent release by the Christchurch Central Development Unit's recovery blueprint for the quake-hit city should provide some of the stimulus for South Island companies going forward, Munro said.

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"In terms of getting people back into the CBD, more than there is in the city today, there is going to be some slow growth in people numbers over the next 12 months.

"But in the next 12 months that follow that I think we'll see lots of new buildings that will be completed and tenanted," Munro said.

- BusinessDay.co.nz

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