South Island listed companies have rallied from a mid-year slump to notch up a 8.5% - or total $348 million - gain in the market capitalisations of the combined 30 companies.
The Deloitte South Island Index revealed that for the quarter to September the index had more than regained the losses of the previous quarter and was well up on the same period last year.
Of the 30 companies, 60% (18) saw a rise in market capitalisation, 20% (6) maintained their capitalisation and the other 20% registered a decline.
In dollar value, hard coking coal miner Pike River Coal made a $101 million, or 28.5%, gain in its capitalisation, while in percentage terms, New Zealand Farming Systems Uruguay was up 50%, with a $51.3 million gain and Skellerup Holdings up 38.2%, or $49.7 million.
The Deloitte South Island Index market capitalisation of $4.45 billion was $891 million higher than at September 2009, corporate finance partner in Deloittes Christchurch office Paul Munro said in a statement yesterday.
"South Island listed companies have mostly rebounded from a mid-year slump but the retail sector continues its decline," he said.
Pike River exported its second shipment of coal but its share price had softened since, after it announced a downgrade of as much as 45% in forecast coal production, because of problems developing underground service roads in its tunnel.
Farming Systems' gain went in tandem with the successful $120.3 million takeover of the Uruguayan dairying company by Singapore-based Olam International, which is expected to inject a further $60 million into the cash-poor business, while Skellerup rebounded following an improved second-half performance.
Mr Munro said the Christchurch earthquake and failure of South Canterbury Finance did not appear to have had an immediate impact on the trading performance of South Island companies.
The index recorded a 4.9% increase during the month of September.
"There may be a dip in the short term as damages continue to be assessed, but it is likely growth will pick up next year as rebuilding gets into full swing," Mr Munro said.
However, he cautioned that the Deloitte index did not reflect the recent New Zealand Institute of Economic Research survey which indicated a drop in business confidence and activity in New Zealand, although this may be borne out in the next quarter.
"The South Island has fared particularly well this quarter but it would be a brave man who would predict a similar increase in the year's final quarter," Mr Munro said.
In terms of sector movements, almost all sectors experienced growth in market capitalisation for the quarter, with primary sector companies leading the way with a 19.9% improvement.
Mr Munro said the South Island would continue to be influenced by the strength of the global recovery, and that of the wider New Zealand economy, but the important primary sector continued to show signs of a turnaround.
The retail sector fell by 6.8% during the quarter. The decline in retailing followed a poor performance in the previous quarter, which amounts to a 22.3% decline during the past six months, he said.
The most significant index decline was experienced by Kathmandu Holdings Ltd, which lost 7%, or $30 million, of its market capitalisation in the quarter, after falling short of its earnings forecast.
