Shares follow world markets in dive

Press, 2 December 1987, Page 39

Shares follow world markets in dive

A new wave of selling hit the New Zealand sharemarket yesterday as it followed other overseas stockmarkets down after a sharp fall on Wall Street overnight.

A fall of 81 points took Barclays’ index of 40 industrial shares well past its previous low for the year, 2146 reached on November 12, and this index is now at its lowest level for 21 months. The N.ZS.E. capital index fell 27.56 points to 742.57 — 26 points of it in the morning session. Offshore investors did much of the selling on the New Zealand market and trading was active as 13.3 million shares changed hands for $13.5 million — an average of 101 c a share.

Falls outstripped rises by a margin of nine to two as prices of most leading stocks were marked down when the market took fright again at the sharpness of falls overseas. On Wall Street the Dow Jones index fell 76.93 points to 1833.55 and in London the FT3O index fell 57.3 points to 1250.9. Those markets appeared to react to the latest drop in the value of the U.S. dollar, and growing fears that the United States economy is out of control. Most sharebrokers said

they expected the market would fall further if that was the direction taken by overseas markets. However there was no panic evident, unlike the earlier crashes. The falls were widespread, and few sectors escaped the onslaught. The only sector index to rise was construction. Much of the selling focused on Brierley Investments, and one parcel of 1.3 million shares crossed at the day’s lowest price of 210. It closed at 212 —13 c down on the day — and was the

volume leader with 2.2 million shares traded. Dealers said other big special sales were made in Chase and Equiticorp. Judge Corporation, which said in a statement that an attempt was being made to put the company in a solvent position, was again hammered by the market, losing more than half of its already skimpy value. Almost 1.9 million shares were traded, and the shares closed at 4c, from 9c. Kupe lost 10c to 65, and Renouf Corporation 4c to 58. Investors were not fussy

who they clobbered, and blue-chip industrials were hit just as hard as investment companies. Fletchers shed 14c to 424 and Goodman Fielder 17c to 348. Carter Holt slumped 12c to 188, Ceramco 10c to 310, Lion 15c to 555, McKechnie 22c to 130. Newmans 12c to 140, and 10c by 'NZ Cement at 160, Sanford (165), and Wilson and Horton at 455. Wilson Neil was 8c lower, to 85, and among the many 5c falls here were noted Bank of NZ at 128, its finance subsidiary B.N.Z. Finance (115), Feltex (295) Fisher and Paykel (440) Magnum (425) Waitaki (160) and Welgas (455). Falls were no smaller among the investment companies. Equiticorp fell 15c to 148, Chase 10c 10 100, Capital Markets 9c to 156, Jarden also 9c to 88, lEP 11c to 144, Robert Jones Investments 13c to 142, while 5c falls were posted by Euronational at 85 and Omnicorp at 70. Crown slipped 7c to 140.

Apparel was sold down 17c to 48, and Energy Corp lost 20c to 310. In spite of the rise ip the price of gold overnight New Zealand gold miners did not benefit — rather the contrary: NZ Gold fell no less than 300 c to 50c, and OPP 280 c to 400.

Mr Simon Flood, of the Christchurch sharebroking firm, Egden Wignail and Company said that the market’s knowledge at the opening of heavy selling in New York and London created an air of uncertainty. This was then reflected in selling pressure on leading shares here, and trading was more active. The market made an attempt to stabilise late in the morning session, he said, but the barrier thus established was breached in the afternoon. The pessimism does not look like letting up. Interest rates are coming down, but investors are just not interested, Mr Flood said.