Market rally continues

Press, 12 September 1983, Page 26

Market rally continues

By

ADRIAN BROKKING

The New Zealand sharemarket rally which began late the previous week continued last week, and prices rose strongly in the first four days of the week until a small bout of profit taking on Friday took the edge off the market. The N.Z.U. index closed on Friday at 951.45, 13.69 points below its all-time nigh and 3.43 points below the high for the week reached on Thursday, but a gain of 26.90 points compared with the previous Friday. Trading was only slightly less active — an average daily volume of 2.2 million shares, against an average of 2.3 million for the previous two weeks. For the whole of the week rises outnumbered falls almost three to one. An indication of the markets strength is that during the week 29 issues reached new highs for the year.

Once again they were mostly second-line stocks, but included were Lane Walker Rudkin, I. W. Dow, Rothmans, National Insurance, Fisher and Paykel, and FTC.

Local companies continued to feature in this category: apart from LWR, Mount Cook, Williamson Jeffery, and M. O’Brien showed up. Two stocks fell to a new low for the year — Holeproof and Lanes. Both are in the textile sector, which has as a whole not performed well this year. Shining exceptions, of course, are LWR and Alliance Textiles, both at new highs. LWR is already known to have done well in its latest financial year, and market rumours have it that Alliance wjll publish an excellent report soon. During the week Alliance reported that it would repay the Government and DFC

funding arranged three years ago, using SB.SM of its own resources, and that it would buy the Mosgiel Woollens mill, which had been leased from DFC for the last three years. Although oil stocks continued to dominate trading last week, it was good to see that a fair amount of the money from recent profit taking was recycled into industrial shares. Major beneficiaries were the timber, pulp and paper sector, and the financial intermediaries sector. However, strong rises were chalked up by the gas companies, Morrison P.1.M., L. D. Nathan, Allflex, and John Burns, while rises around 10c were too numerous to mention. Apart from Holeproof, already mentioned, the largest falls were recorded by the two wine companies, Cooks and Montana, Joseph Nathan, and SFM.

The fall by SFM is a natural reaction to the events of the previous week, now that Fletchers have gained control; Cooks Wine reported a trading loss of $721,817 for the year ended June 30, compared with a profit of $1,128,131 the previous year. The fall by Montana is no doubt in sympathy. While the market in oil shares had become somewhat less bullish in recent days, investors will be kept busy during the next few weeks evaluating the spate of new issues and options issues coming on to the market. Terms and conditions vary from issue to issue, and no doubt the options market will develop a few more new ploys.

Meanwhile most market watchers appear to remain optimistic, as confidence increases here and abroad that the economy is finally coming out of the trough.