Brokers see little downside risk

Press, 23 March 1985, Page 24

Brokers see little downside risk

The New Zealand sharemarket had a good if quiet week, said Mr David Dott, a partner in the Christchurch firm of sharebrokers, Chamberlain Sturge and Co.

Barclays’ index of industrial shares pose every day on moderate turnover, helped by the stands in the market for Alex Harvey Industries and Fleur International which were quite easily acquired, he said.

“Interest rates were relatively steady although the last two days saw announcements of rate increases, including the Rural Bank. "The sharp rise in the price of gold, and recent oil drilling reports have added interest in the mining and oil board. “All in all, the sharemarket just does not want to go down, and whenever it falls a little something will hapapen to keep things on the boil. “The take-over bid for Alex Harvey has not yet been digested by the market, and this will be reflected in next week’s trading.

“All present indications are that the market will be firm next week,” Mr Dott said.

The market put up a disappointing performance given the fact that there were two bids going, said

Mr Geoff Nixon, an analyst with O’Connor Grieve and Co, Wellington sharebrokers.

He attributed the relatively poor performance yesterday to the strength of the New Zealand dollar, as this tended to depress New Zealand exporters and made the New Zealand sharemarket as a whole a less attractive investment proposition. However, given the high interest rates the New Zealand sharemarket had a good week, he said. It had reacted positively to the floating of the New Zealand dollar, and the fact that “market sentiment” shares such as Brierley Investments and Charter were keenly sought augured well.

Mr Nixon said that he saw the market performance in the immediate future linked to the New Zealand dollar, and therefore caution was indicated. The dollar was strong at present for technical reasons, but he was inclined to be bearish on the dollar, he said. The forward momentum in the market slowed this week while share prices consolidated, said Mr Brian Kreft, a partner in the Dunedin sharebroking firm Forsyth Barr and Co.

“The stabilisation of money market interest

rates, the release by the Treasury of its forward projections' of the country’s future economic performance, and continued takeover activity, combined to reduce the potential volatility currently inherent in share prices,” he said. “A technical analysis indicates the market is running on the trend line, which means that in the absence of unforeseen events share price movements, in the coming week, should not be dramatic except for certain special situation stocks such as Farmers Trading,' Alex Harvey Industries, and Commercial Securities.

“Investors should not ignore the possibility of the markets’ potential to ease in the short term, particularly now that both Fletcher’s and Brierley’s results are known. An influencing factor in the market will no doubt be the acceptance or otherwise by the directors of Alex Harvey Industries of the bid for control of that •company.

“The next 10 days will also see the filing of many new prospectuses for debt securities; currently finance houses are busy reaching conclusions on future interest rates, and the pattern of their expectations will become clear when these prospectuses appear,” Mr Kreft said.