Market collapse not likely, says AMP

Press, 19 February 1987, Page 24

Market collapse not likely, says AMP

PA Wellington Sharemarket collapse is not likely, Mr Gerald Naughton, the manager of AMPs portfolio investments and investment linked funds, said yesterday.

The sharemarket’s strength over the last quarter of 1986 was quite remarkable in view of rising interest rates and the Government budget deficit forecast, he said in. the AMP portfolio quarterly report to December. An important feature towards the latter part of the year was the extensive cash drain on the market from new floats, cash issues and share placements. “Influenced by this drain and general market uncertainty, early 1987 has seen a weak market,” Mr Naughton said. "However, I feel that a collapse in the sharemarket is not likely. “Good gains will still accrue to selective investment in quality stocks”. For the year to December, 1986, the AMP portfolio fund’s A unit, for which AMP chose the investment spread for

superannuation clients, returned 50 per cent, he said.

The total value of the fund was now just under $2OOO million, at $1917 million of which $l6OO million represented superannuation business and the rest was for individual investment linked policies. The share portfolio’s strong performance, with a return of over 100 per cent, reflected investment in such leading stocks as Wattle (with a 79 per cent increase in share price for the quarter), NZ Forest Products (up 46 per cent), Goodman Fielder (up 43 per cent), Fletcher Challenge (up 36 per cent), Ceramco (up 32 per cent) and Wilson and Horton (up 32 per cent). The investment-linked fund’s New Zealand share portfolio now amounted to $9OO million, in addition to the $l6O million international portfolio, Mr Naughton said. The property portfolio showed good capital growth and performance, with the P unit increasing by 16.8 per cent during the quarter. This eclipsed all previous quarterly performances and produced a record annual return of 41.4 per cent. The year's capital outlay of $7O million, iaciudasg $47 million on new eccstncCirK, also surpassed peevwus records.

This resulted in an increase in the total value of the P unit to $375 million. $290 million of which was backing the superaanuatkm plans, Mr Naughton said. The P unit performance reflected record commercial

rentals, fuelled by strong tenant demand.