Source: Radio New Zealand
Top picks for the year included Sanford, A2 Milk, dairy co-operative Fonterra and apple and pet food exporter Scales. RNZ / Angus Dreaver
The New Zealand Exchange Top 50 Index is ending the year slightly stronger than where it started, with a few out-performers more than offsetting weakness in others.
Harbour Asset Management portfolio manager Shane Solley’s top picks for the year included seafood company Sanford, speciality milk company A2 Milk, the dairy co-operative Fonterra and the apple and pet food exporter Scales.
“Over the year, certainly the New Zealand share market performance has improved,” Solley said.
“People are seeing the market is getting this earnings recovery, but we will want to see confirmation, and so a lot of investors will be watching for the December period results that should come through in February, just to confirm that momentum.”
Generate investment specialist Greg Smith said the dairy sector had been particularly strong, with A2Milk’s share price up about 60 percent and Fonterra’s 40 percent, while Fletcher Building rose 25 percent, despite having had a difficult time over the past few years.
“It’s had its fair share of problems in recent years, but investors seem to be seeing some light there on a number of fronts and also the fact that it is a name that should benefit as the economy turns around.”
He said an easing in interest rates, as well as a notable increase in building consents.
“Could make for a much better 2026 for Fletchers and others in that sector.”
Solley said the second half of the calendar year had seen some big swings in the economy, as large cuts to the Reserve Bank’s official cash rate helped improve the outlook for a number of businesses.
“But really that first half of the year, we were rolling through negative earnings downgrades, and so that’s been a real battle for the market. If I look over the full year, there’s a couple of themes that come through.
“The share prices that have done better are Tower and Turner’s Auctions, with really strong franchises that could deal with that slower economy.
“Businesses like Fonterra, Sanford, A2Milk, Scales – great businesses run by people who are really focused on improving returns.
“We’ve also had some really strong infrastructure franchises with purchasing power. Channel Infrastructure, Napier Port – they have got some great growth opportunities, so the markets rewarded them.
“And then finally, over the full-year period, we’ve seen Tourism Holdings, for example, with merger and acquisition activity.
“But we’ve actually seen some of these domestic improvement names start to come back up the list of the best performers over the last six months – Oceania, Heartland Group, Freightways, Sky TV – and the market has rewarded that.”
Solley said a number of companies with exposure to the domestic economy have had a tough time, but so have technology companies such as Gentrack and Vista, and some big names, including Meridian, Spark, SkyCity, EBOS and Meridian Energy.
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