FUTURES Government stock nervous

Press, 5 March 1988, Page 29

FUTURES Government stock nervous

In New Zealand! Government stock futures nervousness prevailed at week-end and players took their profits. ; All the news to; hand had been discounted by the futures market and any major move bf the contract will now depend on any other major political announcement rather than the short term end of the interest rate market, said the manager qfjMair Astley Futures, Mr Geoff McDonnell. j i

The call rate, despite seasonal demands for taxation funding has remained below 16 per cent on the wholesale I money market. "The Reserve i Bank seems to be maintaining liquidity at comfortable levels and this in turn has been a catalyst to forestall any rise in 90 dayj rates,” Mr McDonnell saiqj

The Barclays j ' share price index futures contract traded at a premium throughout last week.

A correction after such a strong run isj always possible, but the vigour of the rise gives grUund for cautious optimism that share prices ha.ve bottomed, said the manager of Edgen, Wignail Futures, Dr Brent Layton. However, the statement by the Governor! of the

Reserve Bank midweek that the current daily cash target of $4O million, could be adjusted downwards once seasonal pressures go, should be treated with some caution, Mr McDonnell said.

"Slowly investors are regaining the confidence to return to buying equities." ;

Any buying pressure for Fletcher shares should see Barclays index rise, as Fletchers comprise 21 per cent of the market capitalisation accounted for by companies forming the Barclays index, Mr McDonnell said. “It could be said that Fletchers have made an offer the New Zealand Government could not; refuse,” said Mr McDonnell said.

“It wasn’t so much the matter of price of the Petrocorp stake, but more the ancilliary benefit given to the Government, i.e. the call option granted; by Fletchers to allow thej Government to receive! 100 million Fletcher! shares at a predetermined price within a . four year! period.” If the Government take; up the option, they can; then hold the shares and retain a capital gain, or they can sell the shares and realise a capital gain!

I i Effectively, the I Government are getting! a better deal with Fletchers i than with British Gas, [ Mr McDonnell said.; (“The proof of : the pudding (Will rely on .Fletchers price appreciating sufficiently within a four year! period to I make it worthwhile for Ithe Government to exercise its optioh. • ! ‘ the downward trend in Newl Zealand j interest rates has helped put’a ceiling on the ■ kiwi, Mr McDonnell saidJ ! However, whether the ceiling is temporary or not depends upon interest rates maintaining their downward trend in the new,! financial year. This will ;depend upon the New Zealand Governments stock tender programme, details of which will be released later this month, he said. ; . Mr McDonnell said the "dark horse” capable of affecting the kiwi is the United States dollar. Little has; been heard of the greenback lately, but it seems to have! stabilised. ; The wool futures market ; was extremely quiet and! prices were steady. Dr Layton said. I SUS CONTRACTS Mth i Open H/L Last Vol Mar| 15156 156/156 15156 i i !

Contracts traded: 3. Open ’ positions at March 3: Mar 500, May 3, Jun 1, Sep 2, Dec 6, total 512 (up 34)1 COMMERCIAL BILLS Mth Open H/L Last Vol Contracts traded: Nil. Open positions at March 3: Mar l.jJun 10, total 11 (same). GOVERNMENT STOCK Mth Open H/L Last Vol Mar 8617 622/611 8615 491 Jun 8653 654/644 8646 196 Contracts traded: 687. Open positions at March 3: Mar 4420. Jun 1032, Sep 141, total 5593 (up 183). WOOL Mth Open,, H/L Last Vol May 643 643/643 643 2 Aug 668 668/668 668 7 Contracts traded: 9. Open positions at March 3: Mar 244, May 325. Aug 130, Oct 59, Dec 47, Mar 1, total 806 (down 46). 90-DAY BANK BILLS Mth Open H/L Last Vol Mar 8364 368/347 8349 138 Jun 8600 600/600 8600 1 Contracts traded: 139. Open positions at March 3: Mar 1260, Apr 270, May 17, Jun 248, Sep 201, Dec 183, Mar 32, Jun 19, Sep 7, total 2237 (up 155). | SYDNEY ALL-ORDS | (half-points omitted) Prev. Mth 'close H/L Last Vol Mar |1296 315/295 306 1141 Contracts traded: 1141. Open positions at March 3: 5346 |(up 36). BARCLAY’S SHARE INDEX Mth (Open H/L Last Vol Mar 11795 850/785 1850 133 .Jun [lBB9 889/889 1889 1 Contracts traded: 134. Open positions at March 3: Mar 1514, Jun 13, Sep 52, total 579 (down 59).