Sharemarket Exciting start not followed up

Press, 23 January 1988, Page 30

Sharemarket Exciting start not followed up

By

ADRIAN BROKKING

The New Zealand sharemarket began the week with some excitement as the Barclays index of industrial shares jumped 42 points in response to good news on the U.S. trade deficit during the week-end and the better-than-expected C.P.I. figure at home. However, the cheer was short-lived and for the remainder of the week, every successive day had more falls than rises, in extremely slow trading. Reasons for the reverse were some of the sour comment attempting to belittle the achievement on the inflation front, and the announcement • by Japan that its trade surplus with the U.S. actually increased in December. As the U.S. dollar was pushed down again by this news, the New Zealand dollar rose against it, and also against the basket, and yesterday was close to its post-float high. Which goes to show that our sharemarket is very much part of the world scene, and it is not easy to escape the trends on international markets. The news of single-digit

inflation for the first time in 15 years had its greatest impact on the money market, where wholesale interest rates immediately came down. Although rates closed yesterday above their mid-week lows (because of fears of tighter liquidity because of the March tax take) they fell about 0.4 percentage points during the week. Confidence in the sharemarket, already fragile, was not helped during the week by the placing in receivership of Charter Corporation, some of the disclosures at the N.Z. Forest Products meeting and the revelation by the head of the Justice Department’s corporate fraud unit, Mr lan Ramsay, that, in his opinion, at least one major New Zealand company ought to be investigated by his department. Yesterday the Minister of Justice, Mr Palmer, announced that he was considering ordering an investigation into the affairs of N.Z. Forest Products.

Charter’s receivership brings to four, the number of listed companies to be so affected since the October 20 sharemarket crash,

the others being Investment Finance Corporation, Strategic Capital and Leverage Investment Corporation. However, Charter’s total assets of $lOO million are expected to be sufficient to cover its liabilities, according to the managing director, Mr Chris Castle. Its investments include Regina Confections, of Oamaru, Premier Mining Securities (the gold explorer that in turn owns 35 per cent of Spectrum Resources), Australis International, a foreign currency dealer and Azpac International, an angora goat breeder that was itself in trouble when Charter took it over. The news during the week that another sharebroker had been “hammered,” contributed further to investor uncertainty, as did the rumours about the old and venerable Timaru sharebroking firm, J. S. Satterthwaite and Company. It was therefore especially pleasing to learn that this firm not only is safe, but likely to expand further through the participation of the United Building Society.