Market steadies after fall

Press, 1 September 1980, Page 28

Market steadies after fall

By

ADRIAN BROKKING,

commercial editor

The New Zealand sharemarket fell 1.5 per cent last week, the N.Z.U. index closing on Friday at 455.86 compared with 462.65 the previous Friday, and a peak of 463.09 the day before that.

The New Zealand market was in good company: last week markets all over the world went into retreat — almost makes you believe in the sunspot theory. The Sydney all-ordinaries index lost 2.4 per cent to 955.19, the London market’s F.T. index fell 3.2 per cent to 482.7, and the Dow Jones industrial index came back 2.7 per cent to 932.59. However, the local market steadied more quickly, and hovered arouhd the 454.5 mark for three days before picking up a point on. Friday —a performance showing a considerable amount of resilience.

The most exciting development of the .week was the speculation boom in the shares of New Zealand Petroleum Company,'Ltd. The 50c . shares, which began the year at 41c, gained 200 c during the week to reach 400 c. Market sources have attributed the increases to speculation on the company’s joint venture drilling programme off ' Greyntouth, which is due to start next year, and to the fact that the tightly held shares are

also traded on the American i Stock Exchange. New Zealand Petroleum I holds a . drilling licence for an offshore area covering 6143 sq km, and its parent company, Triton Oil and Gas Company of Dallas, Texas, will be its drilling partner with a 35 per cent equity. Triton holds 23 per cent of the N.Z. Petroleum Shares, and together with other American investors hold 80 per cent of the total capital, so that only 20 per cent is graded locally.

The chairman of N.Z. Petroleum (Mr C. C. Shephard) told NZPA that American interests were buying in the New Zealand market because the shares are cheaper here than in Texas, where they are traded “over the counter.”

■ The shares of P.D.L. seem set at long last to take off—they gained 14c during the week to 130 c on an exdividend basis—mainly on the strength of the high level of activity reported to the annual meeting by the chairman (Sir Robertson Stewart). Increasing exports by the company, of course, are the major appeal, but Sir Robertson reported substantial increases in local sales, and the effort that has gone into new developments bringing good results. These include the new

arrangement with Gerrard Industries Proprietary, Ltd, of Australia, giving P.D.L. the right to assemble and market the Ciipsal range of products, and the sale of part of the Malaysian subsidiary to Geo. H. Scoles and Company, of Britain, which adds an extensive range of products to already booming exports.'

At 130 c . the shares are yielding 6.2 per cent from a dividend which is covered 2.1 times.

T.N.L. Group, Ltd (the old Transport Nelson) issued a preliminary profit report during the week which showed an increase ..in the basic dividend from 14 to 18 per cent.

Last year, an additional 2.5 per cent was paid as a centennial bonus.

However, the profit was boosted by a sharp reduction in tax of $703,000, and realised .capital profits of $954,000. The profit from operations,' especially by the parent company, did not fare so well. Increased dividends . is what investment is all about, and the shares gained 2c to 82c after the announcement. As they had fallen from 84c to 80c earlier this still meant a loss of 2c for the week.

At 82c the shares yield 11.0 per cent from the dividend, all of which is tax-free.