N.Z. market goes front page

Press, 29 March 1982, Page 22

N.Z. market goes front page

i By commercial reporter The New Zealand sharemarket became front-page ■ news last week when inj vestors lost millions of dollars worth of potential i capitalisation after share : prices plunged. After a slow start to the ■ week, a combination of factors sent prices reeling, and the N.Z.U.C. industrial index fell 27.97 points on the week. ■ or 4.1 per cent, to close at 659.99. including a drop of 11.81 on Thursday, a big decline which drew much comment. On a positive note, however, it must be said that the turnover throughout the week (and throughout this year so far) had only been moderate compared with the previous two years. There was no panic sell-out; just an absence of buyers. Last month the industrial index was at a record peak of 729.55, but a combination of factors have cut 69.56 points, or 9.5 per cent, from that figure, with the sharemarket having nothing like the heady merger days of Fletcher, Challenge, and Tasman, or New Zealand Insurance and South British Insurance to support it. Factors which caused the market to turn bearish in-

eluded the quarterly predictions by the New Zealand Institute of z Economic Research, a document containing some sombre reading, including a forecast that New Zealand’s pre-election euphoria of a four per cent growth rate would tumble to a post-election depression of only one per cent. In addition, the comment that wage-round settlements in excess of 20 per cent would be necessary to maintain real incomes over the March 31 year also caused a stir. Balanced against this was the “National Bank Economic Review” for March, which had found much cause for optimism from the comments drawn from various business and farming sectors at its local branches. But this optimism may have been ill-founded. In the same week, uncertainty about the meat trade with Iran caused the Meat Board to make the radical changes to meat marketing. At the same time doubts about CSR, the large Australian company, participating in both the Nelson pulp mill with Baigents, and in the Aramoana aluminium smelter with Fletcher Challenge, were raised, and have not yet been finally settled.

In the financial sector, the continuing demand for infla-tion-adjusted savings bonds and increasing fixed interest security rates also squeezed the sharemarket. The promising results announced by Brierley Investments. Feltex New Zealand, and Lane Walker Rudkin in the previous week, and from Andas Group, Andrews and Beaven. and New Zealand Refining last week failed to halt the slide, as all issues came in for reassessment. The results and predictions by Andrews and Beaven and Lane Walker Rudkin, two Christchurch companies which have been through changes recently, look optimistic, but interest outside the listed companies may centre on the future of some of the “Think Big” projects and how New Zealand’s present economic problems are dealt with.