Commercial Market at new high

Press, 27 August 1979, Page 20

Commercial Market at new high

By

ADRIAN BROKKING,

commercial editor

The New Zealand sharemarket reached a new high for the year on Friday, and at 348.87 reached its highest level since June, 1974. Confidence remains at a reasonably high level, but the size of the parcels sold suggests that it is the larger investor and the institutions which are supporting the market. The man whose marginal tax rate is at 60c in the dollar can find some attractive yields among those shares with tax-free dividends. The institutions, of course, simply have to invest the very large amounts of cash that are daily coming in. Commercial building is in the doldrums, and most institutions are probably overinvested in the fixed-interest market after their purchases of the attractive Government

Stock issues earlier this year.

The general confidence seems to stem from recent Government measures such as export incentives, the devaluation mechanism, and the wages policy. If the latter can be made to stick it would be a boon for the country; however, the acid test will come when the meat workers go for their increase. Across the Tasman share markets are also confident as the Federal Budget was on the whole well received. In post-budget trading the major indices rose to their highest levels since 1972-73. The “all ordinaries” ended the week up 12.51 points at 634.09 and the metals and minerals rose 36.68 points to 3309.20. Prices, particularly among leading mining stocks, were clipped back a few cents in

end-of-week trading, with some profit taking. Tuesday’s Federal Budget extended tax concessions to new subscriptions to onshore oil exploration, and was a plus in other ways as it reduced some coal export levies, notably not as far as Utah’s huge open cut operations, and did not increase company tax or reintroduce a gold production tax as was feared. The detection of hydrocarbons, in a new Canning Basin well, in the north of Western Australia, gave rise to “black gold” fever and solid rises by many oil stocks on Friday capped a week which already saw prices rise strongly because of the Budget. However, while international bullion prices rose sharply, gold stocks were flat — after making substantial gains earlier.