Sharp price check almost a relief

Press, 7 September 1989, Page 23

Sharp price check almost a relief

The New Zealand sharemarket fell 66.34 points on the Barclays index yesterday in a sharp correction to its big run up since the beginning of August. Falls outnumbered rises, 35 to 33, on heavy sales: 25.9 million shares sold for a total of $83.1 million.

The general feeling in the market seemed to be one almost of relief. In the six weeks to Tuesday, the market had risen about 25 per cent.

Overnight, share prices fell on Wall Street, the Dow Jones industrial average slipping 7.41 points below its Friday close. Quiet trading was attributed to the delay by many traders in returning from the three-day holiday weekend (Monday was american Labour Day). The Australian sharemarket closed marginally weaker yesterday after profit-taking in futures and options-related trade. Overseas buyers were noticeably absent. In Tokyo yesterday, there was nervousness about interest rates because of the yen falling against the American dollar. The Bank of Japan implied that it might be considering measures other than buying currency to halt the American dollar’s rise against the yen. Mr Patrick Lee, of United Sharebrokers, in Christchurch, said yesterday that the local sharemarket retreated as buying interest temporarily ran out of steam. "After the recent rises in the market the levelling off in prices is to be expected and should be seen as a healthy sign.” The value of turnover was very high, boosted by special sales of Wilson and Horton and Steel and Tube, he said.

TKM announced an improved interim profit and predicted a good full year's result for this Brierley subsidiary. Activity in the trading of Wilson and Horton shares continued. A parcel of 3M shares traded off-market at 850 c, compared with the issue’s closing price of 860, down 5c on the Tuesday close. Another parcel of 170,000 sold for 870 c.

Last week, a company owned by the royal family announced that it had taken a 5.67% stake in Wilson and Horton.

Mr Michael Horton, the managing director of Wilson and Horton, attributed the latest large sale to institutional moves. He said he had suspicions of what was behind the trading volume in the company’s shares, but they were only suspicions at present. Steel and Tube was the third most heavily traded issue after Wilson and Horton and Fletcher Challenge. Steel and Tube is 47.4 per cent owned by Tubemakers of Australia (partly through a New Zealand subsidiary). In turn, Tubemakers of Australia is 49.75% owned by Broken Hill Proprietary Company, Ltd.

Steel and Tube has a 25% stake in Helenus Corporation, the BHP led consortium which bought New Zealand Steel recently. Steel and Tube went ex dividend (25c) yesterday and its closing price of 158 c was a theoretical gain of Bc. A parcel of 5. IM Steel and Tube shares sold at 180 c.

Fletcher Challenge eased for the third day in succession, closing 9c down at 549. Fletcher Challenge’s 16% preference shares closed 50c up at 1750, on the general trend down in interest rates recently, though Government stock and 90-day bills were fairly firm yesterday. Fernz Corporation 17% preference shares also jumped yesterday. They were up 50c at 650. They have risen 287 c, or 79%, this year. Fernz ordinary shares continued their rise, lifting another 6c, to 696. These shares are up 318 c, or 84%, this year. Interest in Brierley Investments eased a little. Brierley’s closed 5c down at 263, despite glowing reports from overseas brokers. The Brierley subsidiary in Britain, Tozer Kemsley Millbourne, eased 10c to 325, despite reporting a profit lift. Industrial Equity (Pacific), the Hong Kong arm of the Brierley empire rose 2c to 367.

Among local issues, the Mount Cook Group firmed 10c to 310 on the sale of a small parcel of shares.