Paul McBeth is the editor of The Bottom Line and Curious News, having worked at BusinessDesk for 15 years. He’s owned shares of NZX since January 2024.
Putting aside the Shakespearean allusions to the darling buds of May, it was heartening to see the S&P/NZX 50 index on the green side of the ledger in its first monthly gain of the year.
The noise emanating from the sound and the fury of Trump 2.0 has been hard to ignore and one thing markets – and corporates – don’t like is not being able to peer into a crystal ball with some clarity about what lies ahead. Yeah, we still guffaw at that one too.
Of course, the animal spirits of the market only go so far and with the flurry of earnings for the March and September years flying thick and fast through the latter half of the month, there was plenty for investors to get their teeth into, if they were so inclined.
One can’t ignore Eroad’s 66% surge in the month – the bulk of which came last week.
Its one-time Canadian suitors finally vacated the building after the travel fleet hardware and software maker managed investors’ expectations by delivering on its revenue guidance, undoing some of the savaging the stock received in the first four months of the year and hitting its highest level since August.
Like Mainfreight, its exposure to North America – where it’s been trying to get its kits into trucks for years – left a bitter taste in investors’ mouths as they pondered the unpredictability of the White House.
Don't bother to spin me another line
And much like Mainfreight, fundamentals ultimately matter.
When the global logistics firm gave a friendly nudge to investors fearing the worst about its outlook and backed that up with what it called a satisfactory result, the flow-on into the share price followed – up almost 27% in the month, even if that hasn’t yet wiped out the slapping it received since the start of the year.
That was a shining light in the flurry of Wednesday and Thursday results when Mainfreight’s earnings were competing for attention from the likes of fellow heavyweights Fisher & Paykel Healthcare, Infratil, Goodman Property Trust and Ryman Healthcare (the less said about the latter the better).
And investors remain nervous.
F&P Healthcare notched up another record revenue and pointed to more growth in the coming year, but is looking pretty rich at a price-to-earnings multiple of 46 times compared to its peers.
That didn’t stop its shares from gaining 7.4% in May, clawing back some of those losses over Trump’s Mexican stand-off in North America.
You know you still scare me
Meanwhile, the hugely complex beast that is Infratil inched down 0.1% in May and has shed 16% so far this year as questions remain over the hungry capital demands of its CDC data centre unit and renewable energy Longroad arm. Both of those are some way off delivering the cash needed to complement its existing bevy of businesses.
And they each face their own headwinds, with the great unknown being whether the hype of artificial intelligence will live up to the boundless optimism about the world’s data future and if Trump’s dismissal of green energy tax credits undermines the viability of pursuing renewable generation in the world’s biggest economy.
As Forsyth Barr’s Aaron Ibbotson and Benjamin Crozier pointed out, you don’t deliver 18% annual returns for 30 years without taking on some risk.
For Goodman Property, the interest rate outlook probably has a greater bearing than its very reliable earnings, and economists have dialled back their expectations for the Reserve Bank’s pathway lower, picking just one more cut this year after a dissenting voice in last week’s reduction spooked bond traders hoping for two or even three.
Predictably, Goodman delivered a solid result and has brought in partners for its Highbrook business park in Auckland, with the shares up 4.1% in May in their first monthly gain since January.
And poor old Ryman.
Investors are hoping it’s hit rock-bottom, because it’s already trading at levels not seen since 2011 and when you’re burning through cash it’s hard to keep your options open. The shares dropped 5% in May, at least snapping three months of double-digit declines.
And at its current market value of $2.13 billion it wouldn’t be overly surprising if some hungry private equity firms had sent a couple of cheeky texts to an investment banker or two to kick the retirement village operator’s tyres.
Watch that door
Just grabbing the headliners from the Big Wednesday and Thursday flurry paints a mixed picture of the earnings season, with plenty of caution out there about Trump’s on-again, off-again tariff regime and concerns that New Zealand’s economy is struggling to switch up a gear.
If you step back and simply look at the price action of the 40-odd companies that reported through the season, 25 enjoyed a higher share price at the end of May, and 15 of those notched up a double-digit percentage gain, while just nine were on the red side of the ledger, five of which dropped 10% or more.
And for all the fear and loathing out there, earnings across America’s S&P 500 rose almost 13% in the March quarter – close to twice the growth analysts had pencilled in.
No surprises then that the S&P 500 ended May up 6.2% and is now in positive territory for the year, whereas the NZX50 is still down 5.3% since we rolled into 2025.
In fact, while we can applaud the fact that our top 50 index beat the 3.8% monthly gain for Australia’s ASX 200, the 3.3% lift for the UK’s FTSE 100, and the 1.6% increase for Singapore’s Straits Times Index, across the year we’re lagging.
While Hong Kong’s Hang Seng has notched up a tasty 16% gain since the start of the year, with some chunky listings injecting some life into the market, and Germany’s DAX 30 surging 21% as investors fled Wall Street, the NZX50 has shed 5.3% so far this year, a steeper decline than the 4.8% slide on Japan’s Nikkei 225.
If stock markets are meant to point to the sentiment in the economy, then we’re obviously still missing our mojo.
And if the government wants to be going for growth, maybe it needs to accelerate some of those efforts to breathe life into the domestic capital markets.
Image from Curious News.
