South Island Firms Hit by Global Instability

Media release

November 21, 2011

South Island Firms Hit by Global Instability

Deloitte South Island Index for the quarter to 30 September 2011 follows world trends and other benchmark indices, declining by 104%

South Island listed companies have been rocked by fluctuations plaguing stock markets across the globe, according to the latest Deloitte South Island Index.

The 15th edition of the Deloitte South Island Index, for the quarter to 30 September 2011, was down by $545.5 million or 10.4% in market capitalisation on the second calendar quarter of 2011. The total market capitalisation for the index now stands at $4.694 billion – 1.1% higher than a year ago.

Paul Munro, a corporate finance partner in Deloitte’s Christchurch office, says the Deloitte South Island Index clearly hasn’t been immune from difficulties affecting markets the world over. Warning signs of global economic deceleration, concerns over the Eurozone sovereign debt crisis, the US Government’s credit rating downgrade and New Zealand’s double downgrade have all played their part in the index’s decline.

The performance of the Deloitte South Island Index during the September quarter mirrored that of the other indices it is benchmarked against, Mr Munro says, with the ASX All Ordinaries (down 12.7%), the Dow Jones (down by 12.1%), and the NZX 50 (down 3.0%) all falling.

“The performance of the index in this quarter just goes to prove that global patterns will definitely impact on South Island companies, particularly export-focused businesses, regardless of the conditions in the local environment,” Mr Munro says.

“Nonetheless, the longer term picture for these companies is positive, particularly with the predicted economic upturn from construction activity associated with the Christchurch earthquake recovery in the year ahead”

The index’s top two companies, Ryman Healthcare and Bathurst Resources (which was included in the index for the first time this quarter), accounted for nearly three-quarters of the loss in market capitalisation, losing $110 million and $283.2 million respectively. Other big falls in percentage terms were recorded by Windflow Technology (down 40.5%) and The New Zealand Wine Company, down by 40%.

Scott Technology was the strongest performer for the September quarter, with an increase in market capitalisation by $10.6 million following a successful rights issue.

On an industry basis, the Biotechnology sector was the only one to record a positive result, up by 9.7% driven by Pacific Edge, while the Retail and Manufacturing & Distribution sectors only had marginal falls, decreasing by less than 1.0% each.

To see the full Deloitte South Island Index quarterly report, go to www.deloitte.com/nz/southislandindex.

ENDS

About the Deloitte South Island Index
The Deloitte South Island Index measures movements in market capitalisation, tracking the performance of 30 listed companies with a registered office and/or a substantial portion of their operations in the South Island.

About Deloitte in New Zealand
Deloitte New Zealand brings together more than 800 specialist professionals providing audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Our people are based in Auckland, Hamilton, Wellington, Christchurch and Dunedin, serving clients that range from New Zealand’s largest companies and public sector organisations to smaller businesses with ambition to grow.

Deloitte’s local experts draw on best practice and innovative methodologies from around the world as part of Deloitte Touche Tohmatsu. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 182,000 professionals are committed to becoming the standard of excellence. For more information about Deloitte in New Zealand, go to our website www.deloitte.co.nz

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/nz/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

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