Chris Lee & Partners Ltd

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

If you would like to follow us on Linkedin, you can do so on the link below:https://www.linkedin.com/company/107542123/

Market News 19 January 2026

Johnny Lee writes:

IT took twelve days, but New Zealand has its first on-market takeover of the year, following confirmation that Rakon Limited has received an offer from Bourns to purchase 100% of the company.

The offer has not yet been formally lodged but is expected to occur this month. The offer will be priced at $1.55, and has pre-emptive acceptance from its largest shareholders, totalling 41.2% of the 90% needed to conclude the deal.

$1.55 per share values Rakon at around $356 million. The share price immediately jumped towards this price, trading on market at $1.40, up from 90 cents. The modest gap between the on market price and the takeover price is normal. Offers do not always proceed, and anyone holding for a takeover would be forgoing other uses for their funds, which can become significant if settlement drags out.

Indeed, recent history with respect to Metlifecare, ERoad and Comvita illustrates the risks of buying shares with the intention of accepting a takeover and pocketing the difference. These gains are not guaranteed.

Rakon designs and manufactures high-tech components, including precision timing devices and crystal resonators. Their devices are used across multiple fields, including telecommunication networks, satellites and autonomous vehicles.

Bourns designs and manufactures similar products, and views the Rakon catalogue as complementary to its existing offering.

Accepting the takeover may be a bitter pill for early stage investors. Rakon listed in 2006, raising $66 million at $1.60 per share. It paid a single dividend, in 2023, of 1.5 cents per share.

The takeover occurs almost exactly 20 years after this listing. The Rakon offer will come as welcome news for recent shareholders – it was trading at 50 cents a few months ago - but long-term shareholders will likely view the offer as a full stop to a disappointing investment.

For other investors, Rakon’s departure will be yet another farewell for NZX investors, and another name for the growing list of companies departing our exchange. Last year saw seven companies depart the exchange, with only a handful of new, much smaller listings to take their place.

The next step is to await the lodgement of the official takeover offer from Bourns. Rakon’s board will then consider the offer, and either seek an independent valuation of the company, or make its own determination in respect to the offer. From there, its shareholders will control the fate of the company.

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Channel Infrastructure, formerly NZ Refining, published an update to market last week outlining its performance over the quarter.

Fuel throughput for the three-month period was up 3.9%, another record high. Both jet fuel and petrol demand were stronger. About half of Channel’s contracted revenue is reliant on fuel throughput, with the rest tied to fixed fees.

Fuel demand, particularly jet fuel, will correlate strongly to local economic growth. Confident consumers travel more often, particularly for leisure.

With regards to development, Z Energy’s jet fuel storage project remains ahead of schedule and is expected to complete later this year. The Higgins’ bitumen import terminal is still on track and is also expected to be finalised by the end of the year.

Further development is expected throughout the decade. This will necessitate additional debt, but will lead to higher contracted revenues and further dividend growth in the years ahead.

Overall, the update showed Channel remains on track and is enjoying a modest bump in fuel demand across the country. The share price is touching 10-year highs, and while debt is increasing, borrowings are being used to invest in assets with long-dated, inflation-adjusted, contracted returns.

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AN early data point emerged last week, providing further evidence that economic conditions are beginning to improve.

The Quarterly Survey of Business Opinion, published last week, reported most New Zealand businesses are now feeling optimistic about the near-term, with a net 9% of firms expecting improving conditions over the coming months.

While most businesses are reporting an easing of cost pressures, many are finding difficulties in hiring staff, suggesting that pricing pressures will soon re-emerge in the labour market. These challenges were observed in both skilled and unskilled labour demand.

The construction sector, in particular, is increasingly optimistic. The sector looks to be rebounding quickly, with most firms now expecting a stronger 2026.

Much of this enthusiasm is being driven by a growing expectation by businesses that household discretionary spending will receive a significant boost this year, bolstered by mortgage repayments resetting at significantly lower rates.

Ultimately, business optimism is just that – sentiment. However, confidence may lead to investment, hiring and spending, and last week’s QSBO will hopefully be an early indication of a strengthening local economy.

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TWO other global developments occurred over the last week of note to New Zealand equity investors.

Firstly, Chinese birth rate data for 2025 was published, showing a new record low of 5.63 per 1,000 people. The previous low was achieved in 2023, at 6.39 per 1,000.

2024’s figure had shown a rebound, leading some to speculate that trends were improving and 2024’s Year of the Dragon would mark a turning point for China’s demographic challenges. Last week’s data suggested that 2024 may instead have been an outlier for the broader, downward trend.

The immediate impact on the NZX was observed with a2 Milk. ATM’s share price fell 11%, shaving $800 million from the value of the company. Infant milk formula products, of course, require infant customers.

The other development was the ongoing dispute between the European Union and the United States.

The US President announced plans to begin applying gradually increasing tariffs on countries opposed to US ownership of Greenland, including Denmark, France, Germany and the United Kingdom. The European Union is now considering retaliatory tariffs.

World share markets, which were closed at the time of the announcement, opened lower the next day. Our own market fell around 1%.

Anyone hoping that 2026 would see a normalisation of global trade rules may be sorely disappointed.

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BNZ Bank – 5 Year Senior Note Offer

BNZ Bank (BNZ) has announced its intention to issue a new 5-year senior fixed rate note.

Although the interest rate for these notes has not yet been announced, we anticipate a rate of approximately 4.20% per annum, based on current market conditions.

BNZ will not cover the transaction costs for this offer. Therefore, brokerage will be charged to clients.

This offer has opened today and closes at 10am this Thursday (22 January).  If you would like to register your interest, pending further details, please contact us promptly with the amount you wish to invest and the CSN you plan to use.

Please note that indications of interest do not constitute any obligation or commitment to invest.

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Travel

21 January – Wellington – Fraser Hunter

23 January – Wairarapa – Fraser Hunter (FULL)

27 January – Christchurch – Fraser Hunter (FULL)

28 January – Auckland (Albany) – Edward Lee

29 January – Auckland (Ellerslie) – Edward Lee

12 February – Lower Hutt – David Colman

13 February – Blenheim – Edward Lee

18 February – Christchurch – Johnny Lee

Johnny Lee

Chris Lee & Partners Ltd

Market News 12 January 2026

Johnny Lee writes:

2026 is now upon us, as traders return to the office and look to position themselves for the year ahead.

January is typically a quiet month for equity markets, marked by low liquidity and a dearth of company-specific news. Very few companies report in January, instead preparing their presentations ahead of February’s reporting season.

The bond market is similarly quiet in the first month of the year, with almost no maturities occurring in January and little activity in the primary market, although BNZ has indicated it may soon offer a 5-year Senior Note with a likely interest rate of around 4.20% per annum. The Reserve Bank does not publish its next Monetary Policy Statement until 18 February, and even economic data publication tends to slow down over the summer break.

This year has been no different. Markets have instead been driven by increasing geopolitical tensions, as investors weigh up the non-financial crises flaring up around the globe.

The action taken by the US in Venezuela has seen some volatility in commodity markets, particularly oil and gold. US oil companies, once major constituents of the US indices, have seen the same volatility in their share prices, as investors attempt to understand the future of the oil-rich South American nation. Subsequent commentary from the US president regarding Greenland, and the ongoing crisis in Iran, has led to further uncertainty in markets.

Concerns regarding the so-called “AI Bubble” continue to dwell on the minds of investors. Enormous sums are being committed to meet the forecast demand for AI and data centre use, with the likes of OpenAI, Softbank and the major US technology firms signing deals worth hundreds of billions to secure capacity and electricity generation. Investors will be hoping 2026 proves the value of these investments, as revenues begin to reflect the enormous sums being invested.

Another growing fear for the year ahead is that of the US Federal Reserve’s independence. The current Chairman, Jerome Powell, is set to end his term in May, with a replacement expected to be named early this year. Investors will be looking for clues from his successor as to his views on the US economy, and the interest rate policy needed to achieve the Feds dual mandate.

The few early data points out of the US we have seen so far - consumer confidence, unemployment rate and recent discussion around interest rates – suggest the underlying US economy is improving. However, markets are not immune to geopolitics and will continue to experience volatility as these situations play out.

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Locally, expectations are beginning to build for a more positive 2026, following several years of relative underperformance.

Over the past five years, our gross index has risen around 5.1%, while the US market – driven largely by the growth of technology stocks - has seen gains around 60% over the same timeframe. Many of these gains were seen in the past two years, which saw the Dow climb from 37,000 to today’s value just shy of 50,000.

As New Zealand has no major listed AI stocks, yet, optimism is instead being directed towards the cyclical stocks, as hopes rise for a broader economic recovery in 2026.

Cyclical stocks are those that perform well during periods of economic growth, but struggle when the economy stutters. Local examples include construction, travel, retail and manufacturing. This contrasts with non-cyclical stocks that are less sensitive to the underlying economy, such as utilities and healthcare.

The construction sector is one that will be hoping the worst is behind it. Fletcher Building’s share price has started the year well, outperforming the market, as traders hope the combination of low interest rates and strengthening employment data will lead to greater demand for construction services. 

Sky City and the discretionary stocks will see some interest throughout the year. A rebounding economy should lead to greater demand for both the gambling and hospitality businesses, and the company will begin the year at a low point, having reached record lows last year after its decision to completely recapitalise the business with a large-scale rights issue.

Tourism and air travel will be another sector to watch this year. The likes of Air New Zealand and Auckland Airport would benefit from consumers – both nationally and internationally – having renewed confidence in their ability to spend on travel.

It will also be an important year for our budding listed mining sector. While Santana Minerals may be the most meaningful in terms of market capitalisation, the implications of the success or failure of the project will be widespread. We have already seen a few new listings in this space over the past year, and there is some belief that a number of other mining companies may be eyeing up our capital markets are a vehicle for exploration and development.

With February’s reporting season only a month away, investors will not need to wait long to discover whether underlying companies are continuing to see these green shoots, or whether more time is needed before optimism and cheaper borrowing costs flows through to economic growth and investment.

There are a number of companies on our exchange that have struggled over the past few years, choosing to focus on their balance sheet during a period of broader economic stagnation. These companies will be hoping that 2026 is the year when meaningful economic expansion begins to take shape.

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One early company update this year came from Infratil, which published the latest valuation update for CDC, its data centre business.

The latest valuation saw an increase of $174 million for the December quarter, valuing Infratil’s stake in the business at $6.954 billion AUD. 

Future build capacity – the pipeline of work not currently underway – was also increased, with several under-construction and future planned projects seeing an expansion in scope. 

The data centre story has been a major driver of Infratil’s recent success, and November’s half year result made it clear the company sees enormous potential in the sector, both as an owner of the facilities themselves, and as a solution for the anticipated increase in electricity demand caused by the growth in the sector. Infratil has enjoyed tremendous success in this space thus far.

Hopefully, 2026 will see a continuation of these growth trends.

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BNZ Bank – 5 Year Senior Note Offer

BNZ Bank (BNZ) has announced its intention to issue a new 5 year senior note.

Although the interest rate for these notes has not yet been announced, we anticipate a rate of approximately 4.20% per annum, based on current market conditions.

BNZ will not cover the transaction costs for this offer. Therefore, brokerage will be charged to clients.

If you would like to register your interest, pending further details, please contact us promptly with the amount you wish to invest and the CSN you plan to use.

Please note that indications of interest do not constitute any obligation or commitment to invest.

_ _ _ _ _ _ _ _ _ _ _ _

Travel

21 January - Wellington - Fraser Hunter

23 January - Wairarapa - Fraser Hunter

27 January - Christchurch - Fraser Hunter

28 January - Auckland (Albany) - Edward Lee29 January - Auckland (Ellerslie) - Edward Lee

13 February - Blenheim - Edward Lee

Chris Lee & Partners Ltd