Market News 20 April 2026

David Colman writes:

On Tuesday Fonterra farmer shareholders (FCG) and Fonterra fund Unit holders (FSF) received the capital return resulting from the sale of the Mainland Group division.

The $4.2 billion sale to Lactalis of Fonterra’s brands (including Mainland cheese, Anchor milk, Kapiti cheese, Fernleaf butter and others) provided thousands of farmers with payouts with most eligible Fonterra suppliers receiving somewhere between $100,000 and $1,000,000 (in some cases more).

The payments are in addition to $700 million in Fonterra dividends including an interim dividend of 24cps and a special dividend of 16cps.

Farmers will have different priorities regarding the use of the funds received but are expected to pay down debt, purchase stock and equipment, acquire land, take holidays, and probably buy the odd bottle of champagne with the windfall gain.

New Zealand’s aging population is represented in the agriculture industry demographics, and some older farmers will have the option of using the funds to help them exit the industry.

Regions with strong ties with the dairy industry such as Taranaki and Waikato would be expected to benefit but such a large distribution of funds should be seen as providing national stimulus.

The sale proceeds and dividends amount to over 1% of New Zealand’s $445 billion GDP.

The day before the payment the company announced that Richard Allen will be the new CEO from 1 May 2026 replacing Miles Hurrell who provided six months’ notice in March and will fill an advisory role until his eventual departure from the co-operative later this year.

Miles Hurrell was appointed CEO in 2018 and moved the co-operative very much to its core business during his tenure.

Beyond the sale and his departure, Fonterra is in a strong position and will still supply Lactalis with the ingredients for the brands that were sold as well as continuing to supply customers around the world with major markets in China, Europe and South East Asia.

The significant capital released by the sale is hoped to provide a slight tailwind to the fragile New Zealand economy which data suggested, prior to the conflict in the Middle East, was strengthening.

If, when and/or how the disruption to shipping in the Strait of Hormuz ends will largely determine the course of the local and international economy for the time being.

Inflation pressure caused by higher fuel prices, even if eventually temporary, will still be felt even if the situation deescalates as there will be fears disruption to shipping can happen again and the cost to repair damaged or destroyed oil and gas infrastructure will be factored into the price of petroleum products.

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Curiously, globally influential markets in the USA reached all-time highs last week despite a costly war (adding to the already massive and rising US national debt) that has yet to be fully resolved and its ramifications still to be clearly defined.

Hopes are perhaps naively high that ceasefire talks will lead to free navigation of the Strait of Hormuz and that a tense sort of peace will emerge in the wider region, with the assumption that it appears that the conflict has deescalated and should continue to do so.

The multi trillion-dollar S&P500 climbed above 7,000 points for the first time in its 69-year history (up 33.4% from the significant dip, driven by tariff concerns, a year ago) and the Nasdaq Composite exceeded 24,000 (incredibly up 47% from a year ago) also for its first time.

For context the S&P500 is up 2.6% year to date, and the Nasdaq Composite is up 3.7% year to date.

The New Zealand market represented by the NZ50G (a gross index including dividends) has lagged US markets, and other overseas markets, for some time.

For comparison the NZ50G is up 7.94% from a year ago and down 3.7% year to date noting it hit an all-time high in February earlier this year.

Investors who have targeted having reasonable foreign exposure (for example using ETFs invested in international markets) will likely have benefitted from the pace of US stock market growth over the last few years.

The US markets aren’t just simply some of the most aggressive markets on earth, they represent the performance of US businesses (dominated by multinationals with global reach) and the US earnings season for April has so far been positive with a comfortable majority of larger companies meeting or exceeding expectations so far.

Large technology companies (such as chipmakers ASML and TSMC) and major financial firms (including BlackRock, Citigroup, Goldman Sachs, JP Morgan Chase, and Bank of America) reported better than forecast earnings.

The US first-quarter earnings season continues next week but has had a strong start.

Guidance has been mixed but consumer sentiment, geopolitical issues, rising energy costs, and other inflationary concerns have been noted and likely temper earnings expectations looking forward.

Consumers have had to grapple with increasing costs with essential expenses such as housing, electricity, fuel, rates and food climbing.

Wages have not increased at the same pace and the threat of AI to jobs causes anxiety and additional pressure on consumer behaviour.

Even if the transport of oil, gas and other commodities from the Persian Gulf to the rest of the world resumes there will still be deeply rooted enmity between Middle Eastern factions and risks of escalation to more widespread violence will remain.

The USA continues to vehemently support Israel and is tied militarily to the region, largely covered by US taxpayers perhaps partially placated by its current administration’s wavering support for both its country’s roles in NATO and Ukraine’s ongoing defence.

The Middle East region exhibits localised cold war conditions with members of the GCC (Gulf Cooperation Council) having increased their military spending in recent years creating burgeoning local defence industries of their own, but the USA will continue to be a major source of sophisticated military hardware and expertise to Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, and the UAE.

Inflation remains persistent in the USA, and elsewhere, but forecasts continue to point to it slowing (this is more likely if oil prices continue to fall from the recent spike and as shipping disruption is reduced).

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Ryman Healthcare released a reasonable fourth, and final, quarter trading update on Wednesday.

Total sales of retirement living occupational rights agreements (ORAs) increased by 10% on the fourth quarter the year before (Q4 FY25) and included 81 new sales and 250 resales for a total of 331.

Excluding 39 relocations Ryman achieved total sales of 1,371 ORAs for the full year ending 31 March 2026. This included 348 new sales and 1,062 resales and was in line with guidance of between 1,300 to 1,400 provided when it released its half year results.

CEO Naomi James said, “We’re pleased with our final quarter trading results and encouraged by sustained improvement across lead indicators, including net sales applications exceeding turnover levels for the first time since we made changes to our contract terms in late 2024. Our new DMF (Deferred Management Fee) of 30% is now widely accepted, and we continue to see evidence our targeted sales and marketing strategies are working, with growth in move-ins from external customers on these terms.”

New sales of independent units eased versus recent quarters which was expected as fewer new unit were completed for sale, while new sales of serviced apartments were robust.

Ryman completed stages at Keith Park in February, bringing total FY26 development completions to 330 units and beds, in-line with market guidance.

Total resales volumes were below the prior quarter due to lower internal transfers.

External resales volumes increased on the prior quarter, across both independent living units and serviced apartments throughout many locations.

Demand for Ryman’s care offering was described as strong in line with underlying demographic data.

Established care centre occupancy was 96.1% for the fourth quarter, similar to 96.0% in the previous quarter.

Four of the five developing care centres which opened in the last two years are performing ahead of expectations moving to 80% occupancy.

The company is committed to disciplined capital management and maintaining prudent gearing levels. Debt was $1.57 billion as at 31 March 2026 (down from $1.66 billion in September 2025).

Ryman has an active development programme limited to two sites under active construction at year end which is expected to significantly reduce exposure to construction cost inflation.

Ryman’s free cash flow for full year 2026 is expected to be approximately $180 million, driven by strong cash flow performance in the second half.

Ryman will report its full year 2026 results on 26 May 2026.

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Travel

22 April - Auckland (Ellerslie) - Edward Lee

23 April - Auckland (Albany) - Edward Lee

28 April - Wellington - Edward Lee

6 May - Christchurch - Johnny Lee

28 May - Kerikeri - David Colman

29 May - Whangarei - David Colman

Chris Lee & Partners Limited