Deloitte South Island Index continues steady growth
• South Island listed firms market capitalisation
grew 9.0% in the quarter to 31 December 2017
• Quarter ending 31 December 2017 was the Index’s strongest quarter of growth during the calendar year
The Deloitte South Island Index has continued the steady growth experienced in the prior three quarters of 2017. South Island listed firms collectively grew $1,874.5 million (9.0%) in market capitalisation for the quarter to 31 December 2017, the strongest quarter of growth recorded in the 2017 calendar year.
Compared to other benchmark indices, the Deloitte South Island Index’s quarterly gain of 9.0% was outperformed by only the Dow Jones, which grew by 10.4% over the same period. The ASX All Ords grew by 7.4% and the S&P/NZX 50 Capital Index increased by 5.3% over the quarter to 31 December 2017.
Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says the quarter’s strong growth was buoyed by the largest companies on the Index.
“Over the quarter to 31 December 2017, Heartland Bank became the fifth company on the Index to achieve market capitalisation of over $1,000 million, growing by $209.9 million (22.1%) to $1,158.8 million,” says Mr McClay
“The new ‘Top 5’ companies on the Index, each with over a billion dollars in market capitalisation, collectively grew the Index 8.4%, accounting for almost three-quarters of the Index’s total quarterly growth,” he adds.
“The size and quality of these largest companies provide the Index with significant weight which has helped the index weather previous market downturns, but it will be interesting to see how the impact of the recent US and global market falls plays out here across the March 2018 quarter.”
Each of the top 5 companies grew their market capitalisation over the quarter. Heartland Bank’s 22.1% led the way in percentage terms, followed by Ryman Healthcare gaining 14.2% ($660.0 million), Synlait Milk gaining 8.6% ($102.2 million), EBOS Group gaining 8.3% ($216.6 million) and Meridian Energy gaining 2.8% ($205.1 million) during the quarter to 31 December 2017.
Conversely, the smallest 10 companies on the Index pulled the overall Index’s performance down as their collective market capitalisation fell by $28.8 million (23.2%) in the quarter to 31 December.
Outside of the Top 5, the Index’s best performers in the quarter (in percentage terms) were Energy Mad, which grew 100.0% ($0.3 million), followed by Silver Fern Farms gaining 36.4% ($20.1 million) and New Zealand King Salmon Investments up 30.1% ($74.0 million). However, the large percentage change in market capitalisation for Energy Mad is distorted by the minimal share price which increased from $0.002 to $0.004 during the quarter.
The companies experiencing the largest declines in market capitalisation during the quarter to 31 December were BLIS Technology falling 41.4%, Pharmazen falling 40.0% and Blue Sky Meats falling 24.4%.
All but one of the seven sectors posted positive movements in the quarter to 31 December 2017. In percentage terms, the growth of the Index was led by the newly named Aged Care sector (formerly Property sector) with a gain of 15.4%, followed by the Primary sector with a gain of 13.9%. The Index’s newly formed Technology sector was the only sector to record a decline in the quarter to 31 December 2017.
To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.