Market News 26 January 2026

Johnny Lee writes:

Fletcher Building has announced the sale of its construction arm, Fletcher Construction, to French giant VINCI. The share price rose modestly following the announcement, nearing $4, following a strong six-month run. The sale price announced was $315 million, with a potential $18 million increase pending the outcome of certain ongoing contracts.

The Fletcher Construction business includes Higgins, Brian Perry Civil and Fletcher Construction Major Projects. Higgins was purchased by Fletcher Building in 2016.

VINCI is a French conglomerate that made news in New Zealand when it acquired HEB Construction from the Pulman family in 2015. Clearly, the company is looking to corner a meaningful share of the New Zealand civil works sector.

The sale had been flagged for some time, as Fletcher Building had signalled an intention to simplify its business. Just three months ago, Fletcher confirmed it was also looking to sell off its residential and development arm and was seeking expressions of interest.

Chief Executive Andrew Reding stated that he sees Fletcher’s future as becoming “a focused building products manufacturer and distributor”.

This will be a key focus point for the half-year results next month. Investors will be seeking to better understand what the Fletcher Building business will look like once “simplified”. So far, this appears to include building products such as gib, insulation, concrete and pipes, along with the distribution business, including PlaceMakers.

Once this picture is better established, determining revenues and a subsequent market value becomes more straightforward. Currently, the market capitalisation of Fletcher Building is around $4 billion.

Fletcher Building’s missteps over the years have led to inconsistent shareholder returns, including lengthy periods of underperformance. Its last dividend was paid in 2023, and much work will be needed to win back investor confidence.

Fletcher Building publishes its financial results on 18 February. While dividends may not be expected yet, the sale of its construction arm shows the company is clearly focused on reducing debt, reducing volatility of earnings and trying to create a company with predictable, reliable shareholder returns.

Port of Tauranga has decided to lodge another application in the Fast-Track system, following the law change made in December. This relates to the Stella Passage development, which seeks to dredge 10 hectares of Stella Passage, before extending the two wharves either side of the passage.

The project is expected to increase both the number and size of ships docking at the wharves. Chief Executive Leonard Sampson stated last August that the port was being forced to turn away new services due to capacity constraints within the port, with tens of millions being lost.

Shareholders will recall the frustrated remarks of Sampson when a judicial review of the project, challenging the scope of the development, was upheld. The decision at the time stated that an error in the drafting of the law could in fact have been a deliberate omission by the minister.

Clearly, this interpretation was erroneous. The law was amended almost immediately, with the new description of the project reading “In stages, extend the Sulphur Point wharf and Mount Maunganui wharves”. Previously, this only stated the words “In stages, extend the Sulphur Point wharf”. What a difference four words can make.

Port of Tauranga did not give any indication as to its expectations regarding the timeline going forward, stating only that it expects the panel considering the new application to be convened “quickly”. Port of Tauranga also stated that disagreements remain with local iwi and hapū regarding the cultural impacts of the development.

Port of Tauranga shareholders, and those interested in the Fast-Track Approvals process, will be following this application closely.

The surging gold price, up 10% this year so far, has been music to the ears of those with exposure to gold, gold explorers and gold producers.

Perhaps more startling has been the performance of silver, which is up 30% only a few weeks into the year. While gold has almost doubled over the last twelve months, silver has almost quadrupled in value.

These gains have led to some queries regarding investing in silver from within New Zealand.

New Zealand has no silver-producing listed companies, and no exchange traded funds linked to the silver price. This is despite the popularity of our gold ETF, GLD, which listed in October 2024.

There is an Australian ETF linked to the price of silver. ETPMAG, listed on the ASX, is a fund operated by Global X ETFs. Global X also operates the well-known ASX gold ETF, simply called GOLD.

Like its other funds, ETPMAG is backed by the physical commodity, with the silver stored inside a vault in London. The fund tracks the value of silver, adjusted for the Australian dollar.

Other options for investors exist. There are also companies listed on the ASX that produce silver, although producers carry other risks and are exposed to factors beyond the price of silver.

Those preferring tangible exposure can also buy physical silver, purchasable through New Zealand Mint. While this carries risks around storage and insurance, physical ownership incurs no ongoing fees.

Like gold, silver has a number of practical applications, ranging from automobiles, solar panels, cutlery, photography and, of course, jewellery.

While gold may capture headlines following its recent rally, silver has climbed even further in recent months, as investors grow increasingly concerned with the actions of global leaders. Demand for commodity funds has taken a noticeable leap in recent weeks and, while options within New Zealand may be limited, there are silver-linked funds listed on the ASX.

Hopefully, more options will emerge for NZX investors over time.

Travel

27 January – Christchurch – Fraser Hunter (FULL)

28 January – Auckland (Albany) – Edward Lee (FULL)

29 January – Auckland (Ellerslie) – Edward Lee (FULL)

12 February – Lower Hutt – David Colman

18 February – Christchurch – Johnny Lee

3 March – Ashburton – Chris Lee

4 March – Timaru – Chris Lee

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