SHAREMARKET Question of year: where’s the bottom?

Press, 27 June 1987, Page 25

SHAREMARKET Question of year: where’s the bottom?

NEILL BIRSS

The question of the moment in the sharemarket is, has the 1987 slide bottomed yet? The Barclays industrial index slipped another 19.81 points yesterday, taking the fall since the previous Friday to 70 points. But it is still 236 points above the nadir of May 18. The next fundamental clue may be the date of the General Election, but with the lack of reaction to the big lead by Labour in the latest opinion poll, the market may have already built a Labour victory into its prices. Among the chartists, the opinions vary. Some say the market has recovered more than 66 per cent of its latest dip and that this indicates the real bottom was May 18. Other chartists say the bear market has not ended because most moving averages are well above the market. On the 200-day moving average, for example, the index is said to be 200 points below the average line. The cancelling of the Taurus float in Tauranga because of the state of the market was a bad sign. The shortness of price spurts in individual issues on good company news is another. However, the mid-term economic signs for business are good, with indications of falling interest rates. Unfortunately for exporters, overseas merchant bankers’ confidence in Rogernomics has

meant that kiwi dollar is not falling in line with the rates as yet. In the longer run, comparative international interest rates should tell.

A rerating of property and investment companies against the “makers” and “providers” may yield most of any downside in the market over the next few months. As inflation falls the sometimes deceptive glint of revaluation profits will appear less frequently, for the property companies.

A feature of the week

has been the lack of interest by institutional investors. Some have attributed this partly to June’s being the end of the financial quarter. Friday Skeggs Corporation, the float of the week, rose

from 85c to 95c, compared with its issue price of 100 c, which included 50c premium. Mair Astley, the diversified Christchurt'h-based group with strong interests in exporting, announced on Thursday it had taken 7.27% of Skeggs. Surprisingly, Mair dipped 5c yesterday. With a good outlook for the deep-sea fishing industry and a price-earn-ings ratio of 8.5, Skeggs is a good investment for Mair’s. Price falls outnumbered

price rises about four to three yesterday. Judge Corporation fell another 10c, bringing its fall for the week to 40c and its slide since the beginning of the month to 85c, or almost 15%. Brierley dropped 1c to 383. It is 22c up since the

beginning of the month, but seems unable to regain 400 c, which it was last at in April. Some market observers believe Brierley at 400 c would be a milestone that would give new heart to the whole market. Fletcher Challenge was down 5c at 535, well down on its level at the beginning of the moftth — 556. It is now only 5c above its low on May 18. Salmon issues slipped. N.Z. Salmon slipped 5c to 200, still well ahead of its beginning-of-June price: 165 c. The troubled N.Z. Marine Farms fell 5c to 30c, compared with 65c at the beginning of the month. Crowe Corporation eased 3c to 47, compared with 40 three weeks ago. L.D. Nathan eased to 730 from 745 on. Thursday, on suggestions that recent rises were caused by the scrip being tightly held. European Pacific was back to its Monday price after a 100 c fall, and Alcan in which trading was supposed to have been suspended, sold on the Christchurch-Inver-cargill Stock Exchange at 180, down 10c on the last trade, in May. McKechnie’s, a metal, processor, was up 15c at 230. It has lifted 35c since the beginning of the month, The non-voting Bank of New Zealand shares were 1c up at 162, compared with 156 four weeks ago, and 180 in March. Their price path does not augur well for some of the State Owned Enterprise non-voting shares expected on the market this year. Pacer Pacific rose 10c to 1100 after reporting a threefold lift in profit for the year. This issue has risen 10% since the beginning of June.