SHAREMARKET Speculation in NZI

Press, 24 September 1988, Page 36

SHAREMARKET Speculation in NZI

By

NEVIN TOPP

Speculation continued this week on whether General Accident Fire and Assurance would seek the minority interest in NZI Corporation. However, the speculation eased towards the close on a steady, quiet New Zealand sharemarket yesterday, NZI losing 2c to 121. Before the opening bell it sold at 127 in busy trading, but it retreated to the comer at the close. Speculation had picked up on Wednesday after a sale of 10 million NZI shares offmarket at 125 c, a premium of 7c on the then ruling market price. Brokers considered likely buyers to be General Accident, the Scottish insurance giant, which holds 51 per cent of the shares, and the National Provident Fund. The Barclays industrial index ended the week on a marginally easier note, 1.05 points down at 1970.65, and a 35-point loss on the week. The Stock Exchange’s capital index scraped together a 0.14 point gain at 652.48. The share price futures contract showed a premium of 34 points for December, closing at mid-range and perhaps indicating less bearish sentiment. The market also seemed largely unaffected by trading banks holding or increasing base interest rates, but it took little notice of buyers returning on the Australian market.

Both Wall Street and London sharemarkets were down on Thursday (early yesterday, New Zealand time), and Tokyo was closed yesterday for a national holiday. Carter Holt Harvey continued to improve in reaction to news that the Carter family intended to increase their holding, which in turn would increase the equity ratio of the group. Another firm that appears to have shunted equity ratio worries aside has been Equiticorp International, the issue gaining 4c to 57 in active trading. Equiticorp sold as low as 37c last week, having retreated since listing at the beginning of the month. However, news of interest in its 80% stake in Feltrax International, particularly by Fletcher Challenge, is seen as a means of increasing the equity ratio of Equiticorp. The weak trend in Equiticorp, particularly the selling last week, showed how fragile confidence is on the New Zealand sharemarket Although the number of special situation stocks, such as the possible sale of Feltrax, has increased this week, turnover remains low, which has exaggerated the market trend. Prime-West Corporation, the Christchurch property and investment group that joined the growing receivership list in the wake of the October sharemarket crash

earlier this week, lost 0.5 c to bottom at 0.5 c. Trading was quiet, considering the Stock Exchange now requires marketable parcels of 10,000 for issues selling at less than 10c. The receivers of the company, which was formerlly known as Sovereign Gold Mines, said that they were investigating the group’s affairs and any likely restructuring possible. They intended to continue PrimeWest's retail and wholesale operations, including the Pan Pacific Cameras retail chain. Canterbury Roller Flour Mills, the Ashburton milling firm, which yesterday announced a slight decline in total profits, traded at 135 c on a non-market sale, putting the issue a theoretical 13c ahead of the ex bonus price. Newmans lost 3c to 110 after reporting a SI.7M loss, and Mair Astley, which announced a drop in total profits of almost 50%, was quoted buy 180, sell 188 c. It last traded for 190. U-bix and Environ both firmed on buyer interest in the week of possible shareholder changes. Southern Petroleum’s options ended at 0.5 c on the last day of trading. The optionholders now have seven days to decide whether to convert their options or let them lapse. L and M dropped 8c and Mineral Resources 2c in reaction to Thursday’s SUS 7 drop in the bullion price. Table, sales, page 40