Govt package ‘positive’ for investors

Press, 22 May 1986, Page 22

Govt package ‘positive’ for investors

PA Wellington The latest Government economic package was positive for investors, the stockbrokers Jarden and Co., said yesterday. For equity investors, the increasing confidence in the Government’s commitment to its economic strategy was helpful. Inevitably there would be winners and' losers. Winners would be those sectors and industries which could now sell their services directly to Government departments or which could more effectively compete with Government services.

These included the agricultural, computer and export servicing industries.

Perhaps the biggest winners were likely to be in the construction sector, which could expect much higher demands from Government departments, and the finance sector, which would benefit from the increased funding requirements of State enterprises.

Losers would comprise

those industries which were previously benefiting from subsidised Government services.

In general, any losses would be small and widely spread, and were unlikely to produce any significant sharemarket downrating of companies or sectors.

In the fixed interest market, the greater certainty should tend to reduce the risk premium in interest rates. The lower deficit also implied smaller stock tenders, a wider menu of semi-Govemment debt instruments and greater tailoring of these instruments to meet funding and investor requirements.

Jarden said the package was a welcome signal to investors that the Government retained a very clear sense of direction about its economic policies.

It also signalled it had not lost any of its earlier momentum as it approached the end of its second year in office.