SHAREMARKET Strong start but no follow-through

Press, 16 May 1989, Page 27

SHAREMARKET Strong start but no follow-through

Easier long-term interest rates and positive performances from overseas markets stimulated the New Zealand sharemarket yesterday. Market leaders were well supported, with buyers frustrated by lack of scrip. Another negative factor was the firming of our dollar against the Australian one, which particularly affected our dual-listed stocks.

The Barclays’ index of industrial stocks rose 10.44 points to 1992.38, while the NZSE gross index closed 4.57 points higher at 730-73. The latter gained virtually all of this in the morning session, when it rose 4.48 points.

Rises outnumbered falls two to one, but at the end of the day volume was only a moderate 7.3 million shares, exchanged for $12.1 million — an average of 167 c a share. Mr Kerry Porter, of the Christchurch office of Forsyth Barr, Ltd, said that in response to a strong advance on Wall Street and a further rally in the Australian equities market, share prices opened higher in active trading yesterday. “However, a weak Australian dollar which caused our cross rate to move up to 80c at one stage, and the announcement of the sale of Equiticorp’s stake in Fisher and Paykel turned prices mixed in the afternoon.

“Most leaders continued to be well underpinned. “Corporate news again dominated the market with speculation mounting on

the possible sale of NZI Bank. “Australian equities closed sharply higher as institutional investors short of quality scrip aggressively bought the market. The lower Australian dollar further encouraged investors from abroad. Australian markets now await today’s release of the April current account deficit.

“On the New Zealand money markets, bond yields reacted in the morning to comments from the Prime Minister that the Government may take steps to bring interest rates down. That, combined with the recent pressure by economic interest groups casued bond yields to continue the rally which began last Friday. “However, the rally lacked followthrough because of the absence of institutional buyers who are the traditional holders of bonds,” Mr Porter said.

Fisher and Paykel, which slumped 8c to 410 was most instrumental in the fall of the indices. The company announced that Equiticorp’s statutory managers had sold 26 million shares in the company for an average 400 c a share. Other leaders to go against the trend were Bank of New Zealand which slipped 2c to 108, and Goodman Fielder Wattie, 1c easier at 301.

The Barclays share price index futures contract closed at 2050, a 58-point premium to the physical.