The New Zealand stock market fell in August by 4.2 percent and 2.2 percent the following month. The market has also dropped by another 3.6 percent in October so far.
Goodson went on to explain that the market is under pressure from a pincer movement, as it’s caught between modest earnings forecasts and high bond yields. Goodson also went on to say that the market needs inflation to decrease further which, according to Goodson, would allow banks to “take the foot off the pedal”.
The S&P/NZX50 index lost 0.7 percent by the end of trading, down to 10,884.040 at the close. Skellerup industries dropped 2 cents to $4.73, while rural services group PGG Wrightson fell to $3.47 from $3.55.
Despite the falls, Skellerup Industries forecasts a healthy profit of between $50M and $55M in 2024, which could mean an improvement over the $50.9M the company made last year. Other losers include PGG Wrightson whose stocks fell after news that its earnings before interest, taxes, depreciation, and amortization (EBITDA) result fell from $61.2 million to $52m.
Synlait Milk is another NZ Stock Market listing that has been experiencing problems with Independent Director, Simon Robertson, recently resigning amidst spiralling debts. How the business will now approach its mounting debt remains to be seen.
However, as mentioned, the market also saw winners and although 78 out of 185 stocks on the main board saw falls, 48 saw rises. This included fast food company Restaurant Brands, which saw an increase of 5% in their share value. The company attributes these gains to the continued recovery from the impact of COVID, which will come as welcome news to many.
Many shareholders were told that the first half of 2023 was tougher than expected. These difficulties were largely down to increasing competition over price, tepid customer demand, and high inflation. Not only do these factors mean that the first half of the year was tougher than expected, but the challenges are also lasting for longer than expected.
Regardless, NZ traders are remaining calm and avoiding panic as the economy continues to gradually recover. Once the economy has returned to some sense of normality, the stock markets will likely begin regaining previous losses as investors have more spare capital.
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