Market News 13 April 2026

Johnny Lee writes:

The Reserve Bank left the Official Cash Rate at 2.25% last week, as it attempts to navigate an increasingly unpredictable geopolitical environment.

The RBNZ finds itself in a difficult position, with inflationary pressures emerging from non-economic drivers, alongside a rapidly evolving conflict that continues to influence financial markets.

Indeed, the RBNZ statement was immediately out of date. Just an hour prior to its release, the US administration had announced a ceasefire, leading to a 15% decline in the price of oil and a surge in share prices across the globe, including New Zealand. The theme of unpredictability continues.

The statement included internal assumptions surrounding the short-term outlook for the price of oil, including an assumption that crude oil prices drop below $100 per barrel by July. It is already below this point, at time of writing.

The RBNZ Committee discussed the oil price impact at length, particularly the risk of “second-round inflationary effects”. Such an eventuality “would require decisive and timely increases in the OCR to re-anchor inflation expectations”.

The Committee also weighed the possibility of “pre-emptive” and “early monetary policy response”. Such a response would have been a shock for many but should remind investors that until we reach a period of geopolitical stability, all options are on the table - hikes, cuts and prolonged pauses.

Investors should take the overall tone as hawkish and assume interest rates will head higher rather than lower. This is now being reflected in bank forecasts, with ANZ expecting three OCR increases this year, beginning as early as July.

With a geopolitical situation that is seemingly changing day to day, economic factors seem to be less relevant at the moment. For now, the OCR has been held steady at 2.25%, and all eyes are turning back to the Middle East.

A2 Milk

A2 Milk has settled its long-standing shareholder class action suit, paying $62 million Australian dollars to put the case to rest.

Importantly, the amount will be met from insurance proceeds and will not impact the company’s earnings. With class actions seemingly on the rise, one imagines the demand for this insurance will see a commensurate rise.

A2 Milk made no admission of liability. The New Zealand claim is not included in the settlement.

The claim covers a matter of disclosure and alleged that the company “engaged in misleading or deceptive conduct and breached its continuous disclosure obligations”, with the allegations dating back to August 2020. 

In New Zealand, listed companies have obligations to inform the market when it becomes aware of information that may be material to shareholders.

These obligations, while important and necessary, have caused friction for decades now. One specific rule, as written in the NZX Listing Rules, requires companies to release “material” information promptly and without delay through the NZX market announcement platform.

There are exceptions. These include when releasing information breaches the law, when the information is confidential, when the information “contains matters of supposition” or when “a reasonable person would not expect the information to be disclosed.”

Understanding and adhering to these rules is a crucial part of a director’s role. Those who choose to withhold critical information should be challenged by law and punished. 

In this instance, a2 and its insurer have elected to simply pay $62m AUD to put the matter to bed without accepting fault. Investors will make of this what they will.

A similar claim in New Zealand remains ongoing, after a brief pause to allow the Australian claim to reach a conclusion. The affected shareholders that have joined the New Zealand class actions will hear from law firm Hamilton Locke in due course.

Postscript: A2 Milk has also released a trading and outlook update today, which has been poorly received by the market, with the share price down sharply.

The company is facing a range of supply chain challenges. These include freight disruption linked to the Middle East conflict, production constraints, extended customs clearance times, and low inventory levels following earlier manufacturing issues. 

These factors are expected to materially impact performance in the near term. The company has downgraded its FY26 outlook, with lower revenue growth, reduced margins, weaker cash conversion, and earnings now expected to be flat to down on last year. 

Goodman Property Trust 

Goodman Property Trust unitholders would have noticed a change to their portfolio last week, as the company commenced its corporatisation and new stapled structure. As part of this, the company’s stock code changed from GMT to GNZ.

Shareholders now own stapled securities, represented as one share in Goodman New Zealand and one in Goodman Property Services. There has been no immediate impact on value.

This stapled structure will be familiar to shareholders of Precinct’s new stapled securities. 

Effectively, Goodman is now made up of two distinct businesses, one focused on property ownership and the other on property management. Shareholders should receive two dividends each quarter, one from each business, with the property ownership security treated as a PIE for tax purposes.

One cannot buy shares in these underlying companies. They trade as a single security conveying ownership equally across the two businesses, hence the “stapled” moniker.

Retaining the PIE status was the key rationale for this change. The company believed it could not pursue the best strategy for shareholders while retaining this tax advantage, thus necessitating the change to a stapled, corporatised structure.

The Listed Property Trust sector has a poor year, particularly since the beginning of the Middle Eastern conflict and the corresponding leap in swap rates. NPF, the New Zealand Property ETF, has declined 10% this year.

Many shares within the sector are trading at lows. Listed Property Trusts tend to trade against the interest rate cycle, performing well when rates are low, and struggling when rates head higher. At the moment, interest rate expectations are higher due to the inflationary impact of the oil price rise.

However, dividends have been consistent and met expectations. Most of the major Listed Property Trusts now trade at gross yields above 6%. Some are already forecasting a lift in distributions this year.

The question for investors may be the value of a 6% gross return in this environment. Those fearing a rapid rise in interest rates will be waiting for a more permanent solution to the geopolitical climate before making their move. Hopefully, such a solution is forthcoming.

Travel

14 April – Hamilton – Johnny Lee

15 April – Tauranga – Johnny Lee

16 April – Lower Hutt – David Colman

17 April – Napier – Johnny Lee

22 April – Auckland (Ellerslie) – Edward Lee

23 April – Auckland (Albany) – Edward Lee

6 May – Christchurch – Johnny Lee

Chris Lee & Partners Limited