What does the sharemarket say about us?
NEW Zealand is the new ‘‘lucky country’’ (sorry Australia, but you’re off the list for now).
Although there are concerns with the unaffordability of house prices and increasing unemployment, we are currently enjoying a level of freedom that is the envy of most countries.
But is this reflected by shares on the New Zealand stock exchange? By examining stocks representing retail, property, healthcare, energy and technology, can we infer a macroscopic perspective of New Zealand today, or is this just a biased view of a small segment of the community?
All stocks showed a sharp drop between March and April 2020 when the first Level 4 lockdown commenced. This is not surprising, given the uncertainty of the pandemic.
By May 2020 shares showed a ‘‘V’’shaped recovery, albeit with varying degrees of return.
The retail industry was initially concerned with supply chains and consumer confidence in household spending.
However, the Warehouse, Briscoes and Hallenstein Glasson stocks have all recovered and are now more valuable than at any time since 2019.
The food retail industry also recovered. Restaurant Brands recovered by June 2020 to preCovid prices.
Healthcare infrastructure became a national focus during 2020. Stock prices for Fisher and Paykel, a company that develops medical devices and systems for respiratory and acute care, increased from a June 2019 price of around $15 to now more than $30.
The shares were trending up towards the end of 2019 but this has continued, although the current price appears to have now stabilised.
Concerns with agedcare facilities led to a significant drop in Ryman Healthcare from a 2019 high of over $16 to prices below $8 during lockdown. Prices have recovered since May 2020 and continue to trend upwards, although not yet reaching the highs towards the end of 2019.
In contrast, Summerset Holdings now trades at over $12 per share, compared with a 2019 high of around $9.
Our reliance on overseas tourism meant the hotel industry was initially shocked by the pandemic.
Millennium and Copthorne Hotels Ltd — the only hotel owneroperator on the NZSX — dropped from a 2019 price of around $2.75 to a postlockdown price of $1.75.
Prices increased towards the end of 2020 to around $2.25, perhaps because managed
isolation has provided a constant flow of guests at some establishments.
Many New Zealanders are now travelling within our borders for holidays. Air New Zealand shares have dropped from a 2019 value of around $3 to a current price between $1.50 and $2.
Other companies, such as the Sky City Entertainment Group, dropped from a 2019 price of around $4 to a currently just over $3.
However, the share price for Infratil (a diversified company that owns Wellington Airport and public transport services in Auckland and Wellington) has recovered from a 2019 price of around $5 to trade now at over $7.50.
Although Wellington Airport would have suffered during
2020, this has not been the case for public transport.
ERoad, a transportation billing and tracking company, had a 2019 price of around $3 but has shown a positive trend for the last half of 2020 and into 2021, trading at over $5.20.
Energy companies such as Genesis, Mercury, Meridian and Contact have all shown positive trends in the past six months, and are all trading above their 2019 levels. They have all recovered since October 2020.
This may reflect our acknowledgement of the importance of local energy production and renewable energy sources.
A similar positive trend has been shown with technology stocks. Reflecting the lockdown imperative of online education and streaming services, Chorus has increased from 2019 prices from between $5 and $6 to a current price over $8, and peaked at over $9 during September 2020.
SmartPay, a provider of eftpos, point of sale and mobile commerce, has gone from a 2019 stable price of $0.25 to over $1 at the start of 2021.
The madness that is our current situation with house prices is reflected in companies specialising in retail and industrial property.
Investor Property Managers and Property for Industry are both above 2019 prices. Fletcher Building has shown a strong recovery since September 2020, and now trades above $6.20 from a low during lockdown of under $3.50.
This industry has not been affected by the economic shock of the pandemic. Unfortunately, the unaffordability of house prices continues to be an issue that both the government and banks continue to discuss but little effective action appears to be forthcoming.
So what does the market say about New Zealanders? We have embraced online technology and electronic commerce, have increased our spending in retail markets, have made New Zealand our tourist destination and have a growing respect for the healthcare industry and supporting networks. We also see the energy industry as a key component of our future development. The markets suggest that New Zealanders have a confident and positive outlook.
But is this representative of the general population? The stock market reflects the confidence of the country and is partly affected by the behaviour of the population, but it may not capture the poorer segment of the community.
Oxfam recently reported on the effect of Covid19 on the economy and argued that the pandemic has increased income inequality, making it more difficult to combat poverty.
The rich have all recovered, but the poor may take many years just to return to 2019 levels. Job losses in New Zealand, uncertainty about the future, unaffordable and inadequate housing and increasing reliance on charity are all real but not obviously visible from the perspective of the NZSX.
So, the macroscopic view that we have taken is biased. The stock market is represented by large companies, the longterm profit makers and those with money who can invest — but unfortunately this is not true for everyone.