Index reflects 'southern resolve'
The value of listed South Island companies continues to grow and the Christchurch earthquake rebuilding has helped lead the country out of the economic doldrums, an accountancy firm says.
Financial services firm Deloitte, which compiles a South Island share index of 31 companies, said yesterday that the companies' combined value had risen $601 million in value, or 9.8 per cent in market capitalisation, in the three months ended June.
The index is up $2.16 billion, or 47.1 per cent, in the year to June 30, with total market capitalisation now at $6.74b. The index eased last month, which Deloitte said could be linked to the usual winter fall. The quarterly gain followed rises in the December, September and June quarters.
Deloitte partner Paul Munro said 21 of the index's 31 companies grew in the past year. The South Island index's 47.1 per cent annual growth outperformed the NZX 50, which grew 30.6 per cent in the same period. The Dow Jones industrial average grew 15.8 per cent and the ASX all ordinaries index added 15.5 per cent in the year to June 30.
The Deloitte index growth in the past 12 months was a reflection of investors' recognition of southern resolve after the quakes, Munro said.
"The resilience that South Island companies have shown over recent years, in adverse economic conditions, is remarkable."
Investors had scrambled for shares in established companies, and the economic buoyancy had created a positive environment for new capital raising. Ryman was the standout performer for the year with an impressive $1.45b increase in market capitalisation on the back of its 11th successive year of record profits. Ebos retained second place on the index after gaining $232.7m in market capitalisation, and Kathmandu Holdings increased its market capitalisation by $252.5m over the 12 months.
Bathurst Resources had the largest fall in market capitalisation, dropping $263.9m amid legal proceedings. Silver Fern Farms and NZ Windfarms also had a disappointing year, falling $35.1m and $23.9m respectively.
All biotechnology companies achieved positive results over the past year, but most of the sector's growth was through the $111m gain in market capitalisation by Pacific Edge. Also, every sector except energy and mining gained market capitalisation.
"The investments in the Christchurch rebuild and the resilience of the South Island's primary sector continue to underpin the performance of the wider South Island economy, creating a solid platform for continued growth," Munro said.
Synlait Milk, which listed yesterday, and Meridian Energy would probably join the index in the next 12 months.