N.Z. sharemarket rallies at close

Press, 7 December 1981, Page 16

N.Z. sharemarket rallies at close

By

ADRIAN BROKKING,

commercial editor

The New Zealand sharemarket was set back sharply in the first few days of last week, as investors stayed on the sidelines and pondered the future after the uncertainty caused by the outcome of the General Election. This was reflected in the weakness of forestry shares, with Fletcher Challenge also under a cloud because of involvement in ‘‘think big" projects, bearing the brunt. The disappointing result from New Zealand Forest Products did not help sentiment, and the shares lost 14c the next day. However, with the increasing awareness that there would not be an immediate change in Government, market activity picked up and prices began to recover. At the end of the week the N.Z.U. index stood at 666 — a

loss for the week of around 8.5 points or PA per. cent. Winstone announced a vastly improved result, although, the Karioi pulp mill still made a loss. The shares rose sharply the day before the announcement, but the actual figures obviously failed to impress the market for the shares lost ground again on Friday to close the week at a steady 89c. A fine example of shareholder democracy occurred at the annual meeting of New Zealand Farmers Cooperative Association of Canterbury, Ltd, when a number of shareholders spoke out strongly against the idea that the directors should, have a modest golden handshake on retirement. The chairman, Mr H. W. Revell, handled the matter very well, and is to be commended on not trying to

railroad it through although the directors obviously had sufficient proxies to carry the day. It is possible that shareholders’ mood was influenced by disappointment over the absence of a bonus issue in the company’s centennial year. If that is so. then they are definitely wrong. The desire for bonus issues is naive, and it is astonishing that it is so persistent. As Mr Revell pointed out, it does not alter the balance sheet. A bonus issue is paper gold, simply more tickets for the same entitlement. But as it creates more paper the laws of supply and demand make it certain that everything else unchanged, of course — in the long run the increased quantity of scrip will depress the price.