Has the latest batch of results justified the seemingly inexorable rise and rise of the share market?
Short answer: No. At least, not according to Milford Asset Management.
Share prices have remained buoyant, despite a string of confidence data pointing to an economy coming off the boil, and the NZX50 is not far off its all-time record.
Milford senior analyst Frances Sweetman expects the performance of the NZX to moderate from here on.
She said results had done nothing to justify gains on NZX. "Although that said, the results were solid," she said in a commentary.
"On average, when you exclude some of the outliers, the companies that reported delivered about 5 per cent core earnings growth, roughly in line with the experience over the past five years.
"But we don't think that rate of growth can continue to be delivered for the next few years and, in general, share prices are driven by earnings growth and if the earnings growth is moderating slightly then technically sharemarket performance should be moderating slightly," she said.
"That's not what we saw in August, when those results were reported and the sharemarket was up 4.4 per cent," she said.
Sweetman said the market presented some concerns, not the least of which is rising cost pressures.
"Rising wages and a lower New Zealand dollar means rising fuel and other input costs for businesses and that makes it harder to grow earnings.
Plus, the lower business confidence number could translate to lower hiring and lower investment, though I'd have to say we're not seeing that yet in any of the company results.
But for us it's a balance of risk and reward, so we see this as a time for caution rather than confidence or exuberance."
The NZX50 index is up 17 per cent on this time last year, up 26 per cent from two years ago, 65 per cent in three years, and 80 per cent in four years. Incredibly, the index has doubled in just five years.
The bull run has not been in isolation and the America's Dow Jones industrial index pushed ahead to fresh all-time highs this week.
The key driver for equities markets around the world has been interest rates, which have remained abnormally low since the Global Financial Crisis.
However, that might be about to change with the key US 10 years this week hitting 3.18 per cent — their highest level since 2011.
Clear as mud
China is changing its cross-border e-commerce rules, which impact those companies whose business relies on that channel to get product into the republic, such as a2 Milk.
The new law, passed on August 31, creates a broad framework for e-commerce covering the domestic and cross-border trade for imports and exports.
Harbour Asset Management senior research analyst Oyvinn Rimer and veteran a2 Milk watcher said it's still not clear exactly what the new regs will mean.
"The over-arching conclusion at this stage is that no one actually knows because the law that was enacted three weeks ago is so open-ended that you can take it down any path you want," said Rimer.
"It will not be until there is a clear framework for how it will be implemented that you could be in a position to know what's going on," he said.
The new rules cover tax, and product safety and dispute resolution.
"It's not solely with infant formula in mind," he said, adding the new regs appeared to be aimed more at the big e-commerce platforms such as Alibaba and Ten Cent."
So what does it mean for a2 Milk? "I would be surprised if there will be any meaningful changes," he said. "The fundamentals of the business are very strong," he said.
Harbour Asset has a stake in a2 Milk.
Colonial runs high
Colonial Motors, one of the market's oldest listed entities, hit a record high this week of $9 a share. The company, which owns and operates car dealerships, reported a net profit of $24.7 million for the June year, up 12.5 per cent on last year. Colonial, which listed in 1962, noted strong growth in the heavy truck industry.