The New Zealand sharemarket's reputation for offering high-yield, dividend-paying investments has taken a knock in recent weeks.
Fletcher Building and Sky Network TV have been at the cornerstone of the whole yield story, but dismal results from both companies have changed all that.
In addition, Fletcher Building will not pay an interim dividend and Sky TV's interim dividend has been cut to 7.5 cents per share from the 12.5c final dividend it paid in September.
Until recently, both were regarded as reliable, dividend paying stocks — the kind that the New Zealand market had become known for.
But Castle Point Funds co-founder Richard Stubbs says recent events have changed the dynamic.
"There has been quite a dramatic change in the New Zealand sharemarket," Stubbs says.
"New Zealand has been known for what you would 'safe yielders' — businesses that produce cash and pay dividends — and this is still the case in general," he says.
"But there have been companies — generally international players such as a2 Milk, Fisher and Paykel Healthcare and (ASX-listed) Xero — that have come to the fore," he said.
"These companies are selling to the world and they have become more dominant," he said.
Stubbs said Fletcher Building's result could impact on its capital needs and Sky TV "is quite frankly at the absolute pointy end of disruption. We personally would not own Sky TV debt, let alone equity, and yet until now there have been investors owning it for yield," he said.
According to brokers Forsyth Barr, the market's ownership started to change shape last year.
The brokerage estimates that foreign ownership of the local market peaked at a little over 50 per cent at the end of 2016, falling to 46 per cent by last September.
Australian ownership of the local market has remained fairly constant — perhaps due to the Aussies' enthusiasm for a2 Milk — but the non-Australian foreign investment in the local market fell to about 30 per cent from 35.5 per cent over those same comparative periods.
Forsyth Barr senior analyst strategy, Brian Stewart, said the shift reflected a change in emphasis by international investors out of defensive-oriented, safe haven markets like New Zealand's in favour of growth-oriented markets. "It's a change," Stewart says. "We certainly had one-way traffic up until last year."
Synlait in vogue
Synlait Milk's share price took a knock when its joint venture partner a2 Milk announced a tie up with opposition supplier, Fonterra, but the stock has roared back into life on the back of its plan to establish a nutritional powder manufacturing plant at Pokeno.
Synlait, in which a2 Milk has a stake — this week purchased 28 hectares of land at Pokeno to establish a nutritional powder manufacturing site. The company's other manufacturing site is at Dunsandel, in the South Island. Synlait's shares last traded at $7.78, up from $6.75 at the end of last week.
Trade Me pressure
Trade Me's half year profit this week showed just how much pressure its margins have been under.
The online retailer had a weaker period for earnings off its general items division amid competition from Facebook marketplace and Amazon for second hand sales. But despite the pressure, Morningstar believes Trade Me still has the ability to compete against its much bigger rivals.
"Amazon and Facebook remain a threat to some degree. But the Australian online classified businesses have shown that it is possible to carve out a regional niche."
Amazon has yet to enter the New Zealand market with a local warehouse and in the meanwhile Trade Me has moved to exploit the gap by experimenting with free delivery — a move which is expected to give it a competitive advantage.
"Although Trade Me is unlikely to be able to ever compete with Amazon in terms of product range, its multiple verticals mean it is likely to maintain a significant share of audience which is likely to act as a key barrier to competition." Trade Me shares have fallen 16 per cent in the last year and closed at $4.39 yesterday.