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