Bullish forecast for shares

Press, 7 October 1988, Page 2

Bullish forecast for shares

By

OLIVER RIDDELL

in Wellington The stockmarket will continue on an upward trend after its sustained recovery since February, according to the management consultant, Peat Marwick. Dr Ed Hudson, of Peat Marwick, has made this prediction in a report on the performance of the New Zealand sharemarket. If the market continued to reflect fundamentals, the ongoing decline in interest rates would generate a continued rise in equity prices, he said. That trend might be held back by any reports of poor earnings from companies caught by the recession. In the medium term, however, as the economy moved back to growth, the stockmarket was poised for stronger gains, Dr Hudson said. Several factors had contributed to the mild recovery in the New Zealand stockmarket since its trough in February. These included the decline in interest rates, which increased the attractiveness of shares, the announcement of legislation banning insider trading and the Government’s introduction of dividend imputation.

Dr Hudson estimated the current capitalisation of the New Zealand stockmarket at $30,000 million, of which two-thirds was accounted for by the 10 largest companies.