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Is economic recovery on the cards this year · The SME Stream

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  Speaker 1: Let's quickly take a look at the markets now thanks
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  Speaker 1: to our partner's full safe bar with US is Matt Montgomery,
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  Speaker 1: Senior Analysts Matt, good.
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  Speaker 2: Morning, Good morning, right, thanks for having me.
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  Speaker 1: Great to have you here. So what are we looking
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  Speaker 1: at big movers and shakers between twenty six to start
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  Speaker 1: the year.
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  Speaker 2: Yeah, that's right. So you know, to start the year,
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  Speaker 2: the New Zella market's down about one percent, the US
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  Speaker 2: market up about one percent, so relatively mused. But we
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  Speaker 2: have had a couple of points of notes. So we
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  Speaker 2: had a takeover earlier in the year Raycon at a
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  Speaker 2: seventy two percent premium. We've also had Fletcher Building announced
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  Speaker 2: the sale of their construction division last week, which have
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  Speaker 2: been well flagged, and then we've also had a two
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  Speaker 2: milk class week. Stock prices are down about ten percent
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  Speaker 2: to start the year on the back of a weaker
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  Speaker 2: than expected Chinese births numbers. So you know, there's there's
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  Speaker 2: been a fair bit happening to start the year. But
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  Speaker 2: clearly you know, very much early days at this point.
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  Speaker 1: And what about looking ahead, what are your big picks
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  Speaker 1: for the she have met?
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  Speaker 2: Yeah, so I think if we look at New Zealand,
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  Speaker 2: I think before we get into that, it's important to recognize,
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  Speaker 2: I guess the nature of our market, so it's quite concentrated.
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  Speaker 2: So to give some numbers around that, our top three
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  Speaker 2: companies make up thirty five percent of the index. Our
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  Speaker 2: top five make up forty five percent. So within that
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  Speaker 2: top three you've got Fish and pikeal Healthcare in Fertill
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  Speaker 2: and Auckland Airport. So clearly the concentration of that means,
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  Speaker 2: you know, we are somewhat or quite reliant on the
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  Speaker 2: performance of those bigger companies in the overall performance of
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  Speaker 2: the index, and that was showcased last year where the
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  Speaker 2: NZ market was only up about four but we had
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  Speaker 2: the smaller companies going quite strongly. So if we look
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  Speaker 2: at where we are into twenty six, you know Simon
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  Speaker 2: Bridges mentioned the economic recovery, you know we're very much
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  Speaker 2: seeing I guess the early signs of that. Definitely not
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  Speaker 2: off to the races, but you know we are seeing
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  Speaker 2: some of those cyclically exposed companies starting to form better,
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  Speaker 2: so that's clearly helpful. I've also got a desire for
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  Speaker 2: yield amongst investors. You know, that is because term deposit
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  Speaker 2: rates are falling, so that should provide some support for
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  Speaker 2: the yield heavy nature of the new Zella market. Think
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  Speaker 2: of our property companies, think of our electricity companies. And
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  Speaker 2: then you've also got those bigger companies who have struggled
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  Speaker 2: in the last sort of eighteen months or so. You know,
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  Speaker 2: some pockets of optimism within those, just given the lag performance,
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  Speaker 2: so it is bifurcated, is mixed, but generally a sense
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  Speaker 2: of optimism heading into twenty twenty six.
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  Speaker 1: All right, Matt, appreciate the update. Thank you. That is
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  Speaker 1: Matt Montgomery's senior analyst at Full size Bar, thanks to
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  Speaker 1: our partners Full side Bar