Market News – 15 June 2026

Johnny Lee writes:

Last week saw weakness across equity markets, particularly the US, as the world continues to grapple with oil-driven inflation.

Inflation in the US reached an annualised rate of 4.2% in May, although core CPI (which excluded food and energy costs) rose only 2.9%. The US President responded by saying “I love the inflation”.

The stark difference between headline inflation and core inflation further highlights the specific economic challenges facing the world, namely higher energy costs and higher fertiliser costs. Shortly after the inflation data was announced, both Iran and the United States announced further military action and a renewed closure of the Strait of Hormuz, leading to a further decline in markets.

The very next day, the US administration stated that it had “ended the war”, leading to a resurgence in share prices. 

The most recent update suggests a breakthrough has indeed been reached, and that the Strait will be opened as early as this week. The oil price has since declined sharply, while equity prices have continued rebounding.

This mixed messaging has led to high levels of uncertainty in money markets. Last week, markets were anticipating 2026 to see gradually higher interest rates. Now, current market pricing suggests that traders are no longer expecting any rate hikes. 

While equity markets have fallen overall, the decline has been felt more sharply in the technology sector. The Nasdaq, which has a stronger bias towards the technology sector, has declined 4% this month, compared to a 2% decline in the S&P 500. Despite this, the Nasdaq has outperformed for the year.

If this latest breakthrough proves enduring, expect markets to respond positively. Share prices would be expected to rally, while swap rates will see the reverse. Ultimately, these breakthroughs have been noted before, so investors may wait for the ink to dry before making any decisions.

Synlait Milk

Synlait Milk has provided more details to market regarding its financing, as it nears the maturity of its bank facilities at the end of this month.

Its banking syndicate was only willing to refinance their loans on the condition that Synlait’s loan with Bright Dairy was refinanced first.

Bright Dairy was the Chinese-based company that rescued Synlait bondholders (SML010) in 2024, when Synlait announced its major recapitalisation plan. This included an enormously dilutive placement of new shares to Bright Dairy at a price of 60 cents, and a smaller placement to minority shareholder a2 Milk at 43 cents. The price today hovers around 41 cents.

Following this capital raise, the company avoided default and repaid its bondholders. The bonds, that had been trading at less than 70 cents in the dollar, were never replaced. Indeed, any future Synlait bond issue would struggle to muster support from the retail market, such was the level of stress endured during the recapitalisation process.

As part of this raise, Synlait borrowed $130 million from Bright Dairy in a deal that received 99.59% shareholder support. As Synlait put it at the time, “there are no other proposals on the table.” 

This loan was for one year, with an option to extend it to two years. This option was obviously exercised. The new loan will be a vanilla two-year loan with no rights to extension. 

Simplified, Synlait has bought itself another two years. With luck, conditions will improve and the benefits of its new strategy will begin to bear fruit.

Synlait also provided a brief financial update, detailing its performance in the first four months of this calendar year.

This included a $12 million loss. The company did highlight that January was significantly worse than the February to April period, providing some hope for shareholders that the turnaround is progressing.

Realistically, it has been an extremely difficult period for Synlait. This year will likely see another loss, high (but hopefully declining) levels of net debt, and improved cost control.

With the company almost entirely controlled by two entities (Bright Dairy at around 65% and a2 Milk at 19.8%) retail shareholders are largely out of Synlait, outside of an indirect exposure courtesy of a2. The company’s stated ambition now is to become a smaller, simpler and stronger Synlait, reduce net debt and find solid footing before considering options for growth. 

The company still carries a value of around $250 million, with $40 million of this considered tradable. While the days of $13 a share look unlikely to return, retail shareholders will be pleased the Bright Dairy loan issue has been extended, and hopeful that trading conditions begin to improve soon.

SpaceX

A brief follow-up to last week’s item on the remarkable IPO of SpaceX, the technology company co-founded by Elon Musk.

The company began trading on Saturday (NZ time), marking itself as not only the largest IPO in history, but also the most valuable loss-making company. Indeed, depending on day-to-day valuations, it is the only trillion-dollar company that currently loses money.

SPCX was listed at a price of $135 a share, and traded immediately higher, rising to $176 within the first few hours of trading. These gains eventually pared back to $161. The companies value, at market close, was above $2 trillion USD, marking SpaceX as the tenth listed company to ever reach the $2 trillion mark.

The IPO was notable not just for its size, but the final level of retail participation, which was reportedly as high as 30% of the amount raised. Whether this is reflection of very high retail demand, or very low institutional demand, remains to be seen.

IPOs in the United States are conducted differently from New Zealand, including flipping restrictions. Some US brokerages penalise retail customers who sell stock early, with penalties ranging from fees to restricted access in future issues. In New Zealand, investors are generally allowed to sell whenever they like, although incentives are sometimes provided for long-term shareholders, as seen with the energy IPOs.

For New Zealand investors interested in following the SpaceX story, some may soon see it join their Kiwisaver portfolios, especially those with a US market focus. The popular Australian Space ETF, RCKT, may also seek to include it within its portfolio. 

SpaceX’s success, or rather the markets willingness to value the company at these levels, is expected to see more companies seek a public listing to leverage off current conditions. 

Oceania Bond Offer

Oceania Healthcare has announced it is considering an issue of 6-year fixed-rate, senior, secured bonds.

No details have been announced regarding a margin or minimum interest rate. Based on similar bonds and current market pricing, we expect the bond to pay a coupon of around 5.70%. It is worth noting that swap rates have been particularly volatile of late.

Oceania is expected to pay the transaction costs, meaning clients would not pay brokerage. This will be confirmed next week, when the offer is expected to open.

Oceania produced its full year result in May, which saw record sales volume, a meaningful increase in its net assets, and a significant reduction to its net debt. Its debt now sits at 30.1%, the bottom end of its target 30% - 35% range. Although the company is not paying dividends, it is targeting 2027 for a return to dividend payments.

Investors interested in such an offer should contact us as soon as possible with their CSN and the amount they wish to invest and we will contact you next week with further information.

Paraparaumu Seminar

The first of our seminars this year will be held at Southwards, Paraparaumu on July 7. Please contact us via email if you would like to attend.

New Financial Advisor Position

We are currently looking to add an experienced Financial Adviser to the Chris Lee & Partners team.

This is a long-term role based in Paraparaumu, working closely with our long-standing clients throughout New Zealand.

If you are interested in learning more, please contact us confidentially at office@chrislee.co.nz

Travel

24 June – Lower Hutt – David Colman

26 June – Napier – Edward Lee

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