Market remains firmly in cloud cuckoo land

Press, 10 November 1980, Page 24

Market remains firmly in cloud cuckoo land

By

ADRIAN BROKKING,

commercial editor

The New Zealand share-; market remained firm last: week — a sharp correction' on Wednesday has already, been absorbed, and the, N.Z.V. index on Friday; closed only 0.63 point ofi Tuesday’s high. > At 523.90 the index gained; 9.10 points — or. 1.8 per' cent — during the week.; The gap between market expectations and the economic! indicators continues to widen, and market watchers may be forgiven for thinking that the market is moving : into “cloud cuckoo land.’’ However, let it be said at once that those market watchers have been cautious about prospects since the beginning of the year, and have been proved wrong all along — including yours truly. Most of the rise in the indices must, of course, be I

[attributed to the spectacular! 'rises by the merger trio —| iFletcher, Tasman, and Chai-; denge. But the euphoria over;; I this merger has spread to! (the whole of- the market,| !and day by day rises con-; ;tinue to outnumber falls? (more than two to one. ! But it would be fair com-] meat to say that investors' i are in a speculative mood. I ! The chairman of Allied (Farmers (Mr D. L. Hazard) (did not mince words when < he warned that we were in danger of spending the bene- ; fits of new industry long before they were earned. I The sharemarket appears i to be doing the same. Meanwhile, the news on I; the economic and company < front ■— on balance — is none too good in the short ; term. ; The comments by Sir Vai- ; demar Skellerup to the an-'t nual meeting of his group ; iseem to sum up the state ofit

(industry generally. Sir Valdemar forecast a possible [drop in profit of about 20 iper cent this year. I Deanes Industries reported la lean time during the week, (and although the main reaison was the increased loss ;in Fabiola Fashions, pre-tax iprofit excluding Fabiola also' I fell 22.6 per cent to $755,204. Gear Meat Processing reported a disastrous year late on Friday, after Brierley In-! vestments in its annual re-; port had let the cat out of; the bag. Although the mar-; ket was quite aware that] Gear has had many prob-j lems during the last fewi (years, the $5. IM loss came as a shock. Brierleys, which has a 24 per cent interest in Gear, advised that the group “has assumed management control of the greatly depleted remains of what is left’’ of i the Gear company.