SHAREMARKET Prices firm slightly in ups and downs

Press, 28 November 1987, Page 30

SHAREMARKET Prices firm slightly in ups and downs

By

ADRIAN BROKKING

The New Zealand sharemarket closed a little firmer yesterday after a fluctuating week, with a change in direction every day:— up on Monday, down on Tuesday, up the next two days and down again on Friday. The Barclays index of 40 industrial shares closed up 51.89 points at 2214.00 after testing on Tuesday the year’s low of 2146.47. The NZSE capital index, which slipped 1.68 points yesterday, gained 6.87 points to 786.49. This index stands at 53.7 per cent of its greatest value.

Trading was active during the week. Many market watchers, especially the sharebrokers, are moaning about low volume, but I can’t go along with that. At 14.6 million shares traded, the daily volume this week was as high as it used to be in the heady days of the market boom.

The value, of course, is well down. What would you expect? Saying that the market, as measured by the indices, is 46 per cent below its all-time high is the same as saying that total values are down by that percentage. If turnovers by value averaged daily some $2O million two months ago,

the figure is more likely to be around $ll million these days. Similarly, sharebroking commissions are just about halved, of course.

Yesterday’s turnover was 11.3 million shares worth $15.7 million, but the market lost ground. Obviously, the selling into rallies has not yet ended.

The 75 point rally of Wednesday and Thursday continued into morning trading yesterday, but sellers appeared in the afternoon to knock the optimistic forecasts for next week.

However, more important than whether the market went up a bit or down a bit is the fact that the climate has changed considerably, with the temperature rising and the icy-cold winds died down.

Investors’ mood is becoming more optimistic, buoyed by a number of definitely positive events this week. The handsome firstquarter profit by Fletcher Challenge, Brierley Investments’ annual meting, the "win” by Mr Michael Fay in the New York Supreme Court, and the corporate activity surrounding Progressive Enterprises and CPD — and naturally initiated by Brierleys — have put some heart back into investors,

and we 'are seeing, in a modest way, a return of confidence.

Fay Richwhite’s subsidiary, Capital Markets, jumped 26c on Thursday on the strength of the news that the merchant banker’s challenge was valid and legal — bringing back memories of a year ago when the victories of KZ7 pushed the Capital Market’s share price ever upwards, to a peak of 865 c. It makes one wonder, however, if the market’s mood has become all that more sober. It is a bit bizarre that a mere challenge by a yacht that has only just begun to be built would reflect on the share price of a company only indirectly associated with the venture.

Yesterday, the shares fell again, losing 20c of Thursday’s gain, to close at 170 — a net gain of 8c on the week.

The Fletchers profit of $242 million for the first three months of the year puts the group well on the track of a $5OO million profit for the year. It was made up of a $ll9 million trading profit and $123 million in extraordinaries.

The latter figure was already known to the market.

Brierley Investments shares continued to be in demand after Thursday’s

annual meeting ,at which the chairman, Mr Ron Brierley, said that the shares were selling below asset backing for the first time in 10 years. They closed yesterday at 240, up 6c on the day and 10c for the week.

The huge Australian retail chain, Coles Myer, moved into the New Zealand sharemarket during the week to buy shares in Progressive Enterprises — the Auckland Foodtown group. Brierley Investments owns 65 per cent of Progressive because of the Rainbow takeover, and had already announced that it would move this holding from the left hand to the right hand by accepting a bid from Magnum Corporation, which it fully controls.

With reference to the raid by Coles Myer Brierleys said it was not interested in selling, and Coles Myer yesterday pulled out of the market after acquiring just over 10 per cent of Progressive’s capital and said it would probably stay as a shareholder.

Progressive yesterday lost 30c to 380, but the bidder, Magnum, firmed 5c to 440.

Brierleys also moved during the week to full control of Cable Price Downer,