Sharemarket closes off its highs

Press, 9 May 1983, Page 26

Sharemarket closes off its highs

By

ADRIAN BROKKING,

commercial editor

The New Zealand sharemarket continued to break records last week, and even after a sharp correction on Friday many share prices are at all-time high levels. Trading remains very active, and volumes averaged 2.5 million shares a day. Demand for shares continues to outrun supply: the institutions are still in the market — they can afford to take a long-term view — and the market is further spurred by the many takeover rumours around. Most of these are pretty

wild but the market loves it, and just about everything can spark off a rumour — such as that Fanners Trading made its bonus issue in anticipation of a defence against a possible take-over. 1 The correction on Friday was overdue and many market-watchers had expected it much earlier. Some people attributed it to the prospect of industrial unrest evidenced by the stance of the F.O.L.

This may be so, but it should be noted that this market has taken little

notice of fundamentals for the last eight months or so — if it had it would obviously not be anywhere near its present level. Its behaviour has confounded many observers, and the market certainly is reacting in a manner different from anything we have seen in the past. There are many signs which traditionally are associated with the top of a bull-market, just before it goes into a prolonged decline.

New issues, and rumours of more issues and placements, are a feature of a market peak.

Another feature is the tremendous interest shown in share investment by people who normally never won-y about the sharemarket at all. As the hoary old Wall Street saying goes: “When the bell-hop and the chambermaid come into the market, it is time to get out.”

But history does not have to repeat itself; this market so far has done some unexpected things, and at this stage it does not look as if any reverse will be either lasting or deep.