SHAREMARKET The negatives have it

Press, 20 February 1988, Page 30

SHAREMARKET The negatives have it

By

ADRIAN BROKKING

The New Zealand sharemarket finished yesterday about the level of the previous Friday, but to achieve even that much was quite a struggle. The week began well enough, when investors took heart from the announcement of the sale of 70% of Petrocorp by the Government. At the 1 equivalent of 175 c a share the sale netted the Government $BOO million. Petrocorp shares jumped to 165 c, and closed yesterday at 163. Because the purchaser was an overseas company, British Gas, there naturally was some talk of “selling the family silver.”. It has even been suggested that the move was a throwback to the days when New Zealand was Great Britain’s garden. This revival of a colonial attitude that one would have thought New Zealand had outgrown appears to be open to criticism on both psychological and philosophical grounds. The fact that for many years our country was Britain’s garden and in turn a market for British manufacturers was the result of the WakefieldMalthus philosophy, and quite a different concept from the idea of a nation developing with the aid of overseas capital. In any case, because of its endeavour to eliminate its Budget deficit by selling assets, the Government needed a maximum price, and obviously British Gas was the highest bidder. Apart from its effect on the economy, it benefited Petrocorp shareholders, not the least Brierley Investments, which has a 15% shareholding (100 million shares) purchased last year at 140 c a share. Obviously, if Brierleys wanted to sell it would make a $35 million profit. But Brierleys has asked the Commerce Commission for a speedy decision

on its application to increase its shareholding in Petrocorp, which has led to speculation that Brierleys is either looking for a premium on its shares or would like perhaps the balance of 30% to support its extensive gas industry interests. It is all made more interesting by the fact that the most recent testing of the Kupe South 3B appears to show that the Kupe South field could be at least 10 times as big as Petrocorp’s onshore McKee field. Indications are that the rude oil and condensate legs of the field may yield about 80,000 barrels a day for a decade or more, a quantity that will g a long way to satisfy the country’s liquid fuel needs. Among a number of negative factors that sent the market down for the rest of the week after Monday’s heady spurt the major one was probably the announcement by the Prime Minister of a capital gains tax. This took the wind out of the rally’s sails.

The damage was done not so much by the idea of the tax per se but in the manner of its announcement, which strongly implied that on financial policy the Cabinet is still at sixes and sevens.

The question is being asked, is Mr Lange simply placating the Left wing of caucus and the cloth-cap Socialists, or is he cracking up under the strain? Or both? In any case, the way the “Douglas faction” is being treated appears to be so deliberately rude as to smack of malice aforethought.