The NZX in Auckland. Photo: RNZ / Kymberlee Gomes
Retailers and construction companies are expected to suffer this earnings season, reflecting the domestic economic slowdown.
Companies listed on the stock exchange will release their latest financial results over the next two weeks.
Forsyth Barr is picking it will be the sixth-straight season of decline for the NZX. It would be an unprecedented backwards run worse than during the global financial crisis.
Senior analyst Aaron Ibbotson said soft market conditions will have battered earnings and confidence, and expectations for companies such as Fletcher Building and the Warehouse were already very low because they have communicated demand is poor.
"We've called out Vulcan, Warehouse, Sky TV, Air New Zealand that we think potentially will perform quite poorly over earnings season and certainly being at risk of having negative earnings.
"I would say something like Fletcher Building but also something like Steel and Tube, also in the building materials sector, some of the retailers like the Warehouse, Kathmandu, these type of companies, they reflect the backdrop in New Zealand most."
Ibbotson said telco Spark was also expected to do poorly after green shoots or signs of recovery earlier this year did not materialise.
He said a short list of highly defensive listings were likely to perform well, including dairy company a2 Milk and pharmaceutical and animal product company EBOS.
Milford Asset Management's Jeremy Hutton said big electricity companies such as Genesis and Mercury should have a strong season on increased demand and pricing.
But he said looking forward to next year was not so positive.
"They're having to buy gas very expensively to supply their customers, so households and commercial and industrial businesses, that's going to actually have quite a heavy negative impact on the gentailers for their earnings next year.
"The other focus for the gentailers will be what new renewable projects are they going to be able to deliver or bring to financial close so they can start building these projects? There's quite a lot in their pipelines and a lot of them are working through the consent process, which is taking a while."
Hutton said the market needed gentailers to speed up new power generation projects to meet demand and tackle skyrocketing wholesale prices.
Financial outlooks for listed companies could change slightly following the first cut to the official cash rate in four years. Last week the Reserve Bank cut it 25 basis points to 5.25 percent.
Aaron Ibbotson said rate-sensitive companies such as aged care provider Summerset or Fletcher Building could be a little more hopeful about next year now. He did not expect to see such strong share price reactions to earnings season as the response to the cut.
A lot of companies would report one-off costs this season due to the government removing commercial building depreciation tax deductions.