BROKER COMMENTS 'Fundamentals back into consideration’

Press, 21 February 1987, Page 25

BROKER COMMENTS 'Fundamentals back into consideration’

The cold winds of change referred to last week hit the market much earlier than was anticipated, and with great ferocity, said Mr Brian Kreft, of Forsyth Barr, Ltd, Dunedin sharebrokers. This resulted in an overselling situation occumng in selected stocks. One only needs to look at what happened on Thursday and yesterday when the overselling caused leading stocks to literally “bounce upwards,” he said.

“At the beginning of the year Forsyth Barr predicted that investors in the first quarter of the calendar year would be in for a bumpy ride and that is what we are now witnessing.

“The emphasis on activity is without doubt, focusing on the leading stocks.

Second-liners currently have not and probably will not receive the same buying support as they did last year, and sellers in that sector of that market are in abundance. This could well result in that market sector remaining depressed for quite some time.

“This calendar year will see the return of fundamental analysis for share selection. This principle was, to a large extent, abandoned by private investors during 1986 and with the recent shake-oiit in prices, investors once again have seen the virtues of fundamentals, that is to say, the earnings, assets, and the management “The heavyweights oversold last week, as evidenced by the upward movements in their share

prices over the last 48 hours, were Fletchers, Brierley, Euronational, Chase, and Carters. These stocks plus the likes of Wilson Neill, Wellesley, and Paynters, in my opinion, have the ingredients spoken of before.” Throughout the world, sharemarkets are continuing to go from strength to strength and in Australia the future of Ariadne and News Corp looks particularly bright in the short and medium terras. While the world markets continue to rise, Australia whose economic problems are not dissimilar to that of New Zealand’s will be carried along, which is not necessarily the case in our neck of the woods as the current state of the New Zealand market clearly shows.