COMMERCIAL Hectic Trading Pushes Price Levels Upwards

Press, Volume CVIII, Issue 31631, 18 March 1968, Page 17

COMMERCIAL Hectic Trading Pushes Price Levels Upwards

Strong influences from within the country and overseas caused rather hectic trading on New Zealand stock exchanges last week. Turnovers were at the highest level for some years, and there was a corresponding improvement in the share price index.

Turnover on the Christchurch Stock Exchange exceeded 124,000, the highest since the last week in May, 1966, when investors tried to anticipate the June Budget. •

The result of the activity last week was a rise in the share index almost to the highest level of this or last year, although 1967 was not a good year on which to base share price achievements.

The influences within New Zealand appear to come from diverse quarters. Probably the main factor is a desire to quit liquid stocks—usually in the form of money and assets most prone to the erosion of inflation—for real assets which tend to ride an inflation wave. Into this category falls company shares. Costs Pressure Again, the cause behind this might include the postponed wage claim and the effects of devaluation on internal costs which the New Zealand Institute of Economic Research estimates could be 5 per cent in a year. These factors could reduce the purchasing power of money. Before and after Christmas there was a tendency to hold

liquid funds, perhaps until a better trend of the economy’s future emerged. Certainly bank overdraft limits in January were below the targets set by the Government. The response to Ballins Industries’ slm debenture issue, which was heavily oversubscribed, also showed that there was money about for attractive propositions. Tax Payments Traditionally, the market has been weak in March because of tax payments and the need to reserve cash for these. However, in the last two years this has not been so; the market steadied last year after the slide which came after the first of the mini budgets in February. It appears that these cash funds have now been used to take advantage of the low share prices and comparatively high dividend yields,

spurred by Government announcements that no further economic measures will be adopted.

Institutional buying appears also to have been more active in the market and the effect of this will be a reduction in available scrip for buyers. Australian Impact The state of the Australian stock exchange has also had an impact on trading in New Zealand. During 1967 and in the early months of this year, British investment had been pouring into the Australian equity market, at a rate estimated between $2-s4m a day, with some estimates even higher than this.

Partly this occurred because of the fear that the British Budget, due on Tuesday, would place a curb or even a total ban on overseas investment.

It has been this British buying that pushed the Sydney all-ordinaries index to 491.29 points on February 5 and it has been profit-taking in anticipation of a tough British budget that pulled this back

te 461.72 points on Friday. Naturally, buyers into Australian stocks have been wary and sellers cautious. This perhaps prompted the heavy sales of Broken Hill Proprietary in New Zealand last week.

Sales totalled more than $356,500 in the five days, with the climax occurring on Friday when turnover topped $160,000. This was a more active week in this share than the previous busy week in September when more than $220,000 of B.H.P. changed hands. Most of this selling pressure last week came from Dunedin, and most other transactions were in Wellington. Big Shareholding Although this is a very large value of shares to be swallowed by the New Zealand market, it should perhaps be pointed out that there are 10,696 New Zealand share holders in B.H.P. holding 7,292,606 $2 shares, worth about sl3lm. But there is a wider conse quence of this large selling in B.H.P. The cash received by the sellers may be used to buy on the New Zealand market, perhaps in leaders, and this could contribute to the present buying demand.