Market takes news in its stride

Press, Volume CXIV, Issue 33649, 26 September 1974, Page 1

Market takes news in its stride

(By our commercial editor) Although the announcement of the devaluation of the New Zealand dollar came during trading hours —unusual timing for such an event —commerce in Christchurch yesterday continued without pause.

Most banks briefly suspended transactions in foreign exchange after the public announcement, but because of the speed: with which their head offices reacted, Christchurch banks were in possession of the new' official rates of exchange well before noon. Those most affected by the move had some inkling last night, and I believe that the banks had flexible contingency plans already worked out. As there was only about one hour’s delay, very little business would have been involved; there was hardly much time. No need One banker, Mr B. A. Killeen, Christchurch manager for the Commercial Bank of Australia, said that during that hour, only the odd traveller wishing to cash traveller’s cheques might have been in need of foreign exchange. “In that case we would have got in touch with Wellington, and no doubt we should have been able to conduct any transaction without much delay,” he said. But there had not been any need for that. None of the other banks in the city experienced any problems, and all bankers commented on the speed with which official quotations

followed the first announcement. , Trading on the Christchurch Stock Exchange was quiet yesterday. Orderly Brokers knew of the Australian devaluation before they went to the morning call; they expected New Zealand to follow suit to the extent .of an 8 to 10 per cent drop in the New Zealand dollar’s value. Naturally, while awaiting this, no business was done, but quotations widened in anticipation — especially for those stocks expected to benefit — potential sellers raising their quotations. In the afternoon the pace of trading increased. But, as one broker put it, the market is not likely to run away on the news. “There are still sellers about,” he said, “and even in ■ the immediate future there ; will be people who need to ’ sell. Two of the most ; affected shares, Challenge I Corporation and N.Z. Forest i Products, were sold today, : with more sellers among the i quotations.’’ 1 Exports better > The chairman of the Christchurch Stock Exchange (Mr t J. B. Hindin) said that there was some initial encouragei ment for the market in the move. i Export industries would be better placed, and he expecs ted meat company shares, rand the shares of stock and 3‘station aeents and companies

in the tourist and timberexporting fields, and the like, to benefit. “Of course, the balance of payments should improve,” Mr Hindin said, “but the devaluation does nothing to cure inflation. To prevent increasing inflation other measures. such as wage restraint, will still be needed.” Firmer There was a sharp firming of shares in pastoral and in major exporting companies in afternoon trading yesterday on the stock exchanges. The shares of N.Z. Forest Products. Ltd, New Zealand’s largest company, reversed their downward trend of the past month and gained 7c, to 335 c. These shares had been under considerable selling pressure from Britain, but these sellers — who had been predicting a New Zealand devaluation — may now withdraw. Handling Challenge Corporation shares — which had also suffered from British selling pressure — also gained. Stock and station agents should gain because the devaluation will make our primary products cheaper overseas. and should result in greater commission earnings from handling wool and meat. Conversely, importers will face higher costs, and may be PYnprtpd tn tarp worse.