Thursday, May 19, 2022

Investors cut primary sector stocks

The S&P/NZX Primary Sector Equity Index has fallen by 13% since the beginning of the year as nervous investors sell down shares in agricultural companies despite high commodity prices.

The S&P/NZX Primary Sector Equity Index has fallen by 13% since the beginning of the year as nervous investors sell down shares in agricultural companies despite high commodity prices.

The primary sector index of 17 New Zealand listed companies in agriculture, horticulture, viticulture, aquaculture and forestry has fallen nearly 2000 points since the start of the new year, being now around 12,400.

The same 13% loss in value hit the S&P/NZX 50 index, which includes the 50 biggest stocks on the NZX share market by market capitalisation.

For comparison, the S&P/ASX 200 index of the largest listed companies in Australia has fallen 6% since the beginning of the year and the NYSE Composite of the largest share market in the world has fallen 9.6% year-to-date.

Leading the way down on the NZX is a 25% loss in price by Fonterra Shareholders Fund (FSF) and a 15% fall for Fonterra Cooperative Group (FCG) supply shares.

“The horticultural sector has also lost share value this year despite its product prices being at record levels.”

Both stocks are heavily weighed down by uncertainties over Fonterra’s capital structure and milk supply share standard.

FSF and FCG were trading above $5 in March last year before the restructuring intention was announced.

They are now at $2.80 (FSF) and $2.55 (FCG) and have lost half of their market capitalisation of 14 months ago. Farmers themselves have lost $4 billion of equity.

A2 Milk Company shares have fallen 21% since January, from $5.74 down to $4.50, a steady decline with almost no daily rallies.

Synlait Milk has fared somewhat better than its much larger dairy industry companions, its share price remaining steady in a $3.30 to $3.40 range.

The horticultural sector has also lost share value this year despite its product prices being at record levels.

Scales Corporation is down 13% YTD, Seeka down 2% or just 10c, Comvita down 12%, Delegat Group down 14%, Foley Wines down 2%, Marlborough Wine Estates down 17% and T&G Global also down 2%.

For the duo of fishing stocks, Sanford is down 10% and NZ King Salmon has been hit very hard by fish deaths and marine site approvals, down 60% to just 28c a share.

Its share register is churning, with several days during the past month when over 400,000 shares a day were traded. Market capitalisation has dropped from $100 million to $40m.

Despite very good trading results, reaffirmed last week, rural service provider PGG Wrightson has lost 18% of share value since the start of the year.

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