Even though the market has fallen sharply in recent months, analysis from brokers Forsyth Barr showed the 12-month forward weighted price earnings ratio for the New Zealand market is currently 20.4 times, or 13 per cent above the long-run average.
“It is an orderly correction,” said Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene.
“Markets are weaker offshore and stronger Australian inflation and higher oil prices are all acting as a catalyst.”
Sullivan said it appeared the market had taken on board Freightways’ comment that the economy was slowing.
Freightways closed 50c down at $7.55 after shareholders were told at the annual meeting that the economic environment “seems to be worse than we were expecting”.
“Whilst we will be trying to minimise its impact and adjust our cost base in a sustainable way, we now see a risk that ebita will be at or below the level of last year,” the company said.
Sullivan said: “As a freight forwarding company, Freightways is a bit of a bellwether for the broader economy and I think that’s had an impact on the likes of Mainfreight which was off by 61 cents [1.2 per cent to $59.42] as well.”
Freightways said the tight labour market had eased in New Zealand over the past three months and that it continued to assess a number of merger and acquisition opportunities.
On the plus side, market minnow NZ Wind Farms ended 3.6 cents, or 30.1 per cent, higher after announcing at its annual meeting that it had teamed up with Meridian Energy for a $500m to $600m wind farm project in the Tararua ranges.
Meridian, which as part of the deal will end with 13 per cent of NZ Wind Farms, ended 3.5c higher at $4.89.
Fellow power company Manawa gained 8c or 1.8 per cent to $4.29 after announcing it had joined with Alexandra-based Pioneer Energy to investigate the development of a 300-megawatt wind generation project in southwest Otago.
The companies have entered into a 50/50 limited partnership with the rights to develop the Kaihiku Wind Farm electricity generation project on privately owned rural land between Balclutha and Clinton.
Before their annual meetings, Fletcher Building dropped 3c to $4.35, Sky City fell 2c to $1.88 and Port of Tauranga gained 6c to $5.40.
Cash-strapped Synlait Milk recovered a little after taking a beating this week, ending 1c higher at $1.27.
A2 Milk - Synlait’s biggest customer and 20 per cent owner - fell 15c to $4.15.
Among the big names, Auckland International Airport fell by 9c to $7.48.
In the banks, dual-listed ANZ fell 31c or 1.14 per cent to $26.84 while Westpac fell 25c to $22.40.
In the small caps, trade software company Trade Window was unchanged at 26c after announcing it had made steady progress over the second quarter by adding $1.5m to trading revenue, bringing the total to $3m for the half year ended September 30.
At the end of the quarter, Britain’s nChain was not able to settle on a strategic agreement with Trade Window, which would have resulted in nChain taking a stake.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
