SHAREMARKET ‘Don’t sell’ warnings bring buyers back

Press, 4 February 1987, Page 37

SHAREMARKET ‘Don’t sell’ warnings bring buyers back

By

ADRIAN BROKKING

The prospect of renewed corporate activity gave the New Zealand sharemarket a fillip yesterday and led to buying interest in selected industrial shares. A number of entrepreneurial stocks were dragged along in the backwash. Of the shares involved in the three “don’t sell” warnings, Fletcher Challenge rose 25c to 485, Rainbow 8c to 400 while Progressive Enterprises put on 15c to 415.

Trading in Fletcher’s shares was quiet throughout the day, with less than 80,000 shares changing hands, and the issue was not even in the first 10 leaders either by volume or value. The prices ranged from 460 to 490. In fact, Fletcher’s target company, NZ Forest Products, was yesterday’s volume leader with 1.7 million shares crossed —

closing 5c higher at 400. The warnings by Rainbow and Progressive Enterprises were related, and in a joint statement with the notices the two companies said speculation that Rainbow might attempt to take over Progressive “is not warranted.”

They said that preliminary discussions were being held on a closer association, and that a further announcement would be made at the end of the week.

Brierley Investments traded in a range between 398 c and 428 c, and closed at 422 — a rise of 22c for the day. Of its overseas offshoots Tozer KM rose 5c to 410 but lEP dropped 10c to 550. Capital markets bounced back 42c to 552 after being as low as 478 early yesterday morning. Riding on the back of

these jumpers was Chase, 12c up to 552 (range: 530 - 560), Equiticorp, 31c to 492 (460 - 495), Magnum 45c higher at 645, Omnicorp 13c up to 148, Dominion Breweries 20c to 650, and Crown 10c dearer to 195.

However, these good gains were balanced by a number of substantial falls, with a ratio of nine falls for every eight rises. The consensus among brokers was that the market had not yet bottomed out. The tone remained nervous, and a market that can fall 78 points one day and jump back 65 points the next is no doubt volatile.

Although a rally after recent sharp losses was not unexpected, many brokers thought that many investors would take the opportunity to sell.

“The market paused

from its bear run after the surprise announcement from Fletcher Challenge,” said Mr Derek Howarth, market operator for Lawrence Millton and Howarth, Christchurch sharebroker. “The index rose 65 points as selected industrials were sought after,” he said. “The rise was not indicative of the market’s underlying trend, and we believe that the current shake-out is not yet over.

PDL fell 45c to 215 in the first sale for more than a month, and Renouf Corporation, whose. press conference has been postponed until Monday, had the second-biggest fall — 40c to 610.

Falls of 20c were posted by Barclays to 62, Baker to 270, and Bendon to 400; 10c falls were numerous; Watties to 590, Ceramco to 1170, Colonial Motor to

410. Falls of 20c were posted by I W Dow at 250, Euronational at 405, Barclays at 62, Baker to 270, Bendon to 400 and the newlylisted Crowe Corporation to 70. Falls of 10c were numerous: Watties to 590, Ceramco to 1170, Judge Corporation to 860, NZ Equities to 240, Qtron to 520, to mention but a few. L D Nathan dropped 15c to 715, Mainstay shed 18q to 130, and Donaghys 23c to 115. NZ Marine Farms reacted to the news of a whopping big $2.4 million loss by falling 45c to 95. This compares with a high for the shares of 300 c only six months ago. NZ Salmon gave up 10c, to 180, in sympathy.