Bad News Hits All Ords

The Age

Thursday August 27, 1998

JASON KOUTSOUKIS

Renewed concerns over fragile markets in Russia, Asia and Latin America, combined with a worsening outlook for commodity prices, undermined trade yesterday, with the All Ords giving up Tuesday's gains on higher turnover.

The Australian dollar's deterioration against the United States dollar was another negative factor, encouraging offshore institutions to sell their local equity portfolios for fear the falling dollar will eat away their value.

A fall for Telstra also dampened enthusiasm, with the instalment receipts falling 14 cents to $4.47 after Australia's largest company reported second-half profit had fallen a less-than-expected 0.7 per cent to $1.39 billion.

"It's a type of market at the moment that's prone to bad news and will factor in the worst-case scenarios," said Mr Mark Dutton, fund manager at GIO Asset Management.

"It's obviously a flow-through from the problems in Russia and the effect that's had on commodity prices," he said.

Rises were hard to find among the 100 Leaders stocks, with Howard Smith up 15 cents to $8.80 and coming on top of a 13-cent rise on Tuesday after the diversified group announced a 0.4 per cent increase in profit to $94.3 million for 1997.

Brierley Investments rose two cents to 62 cents, and Foster's Brewing continued its run this week, climbing seven cents to $3.60 on heavy turnover of 9.11 million after unveiling a landmark full-year profit result on Tuesday of $446.6 million.

National Mutual rose six cents to $2.83, Colonial nine cents to $5.31, Seven Network five cents to $5.15 and Southcorp four cents to $4.30.

Lend Lease fell 56 cents to $33.74 after going ex dividend (54 cents per share).

Sons of Gwalia fell seven cents to $4.08 and Newcrest fell seven cents to $1.53 after gold for December delivery fell US$1.60 to US$286.9 an ounce on the Comex division of the New York Mercantile Exchange.

Lang Coporation closed the day one cent lower at $1.77, but an after-market trade took the stock down $1.60, with Macquarie Equities selling a large order of 916,148 shares.

Lang - the 100 per cent owner of Patrick Stevedores - has dropped from as high as $2.15 since reports in early July that it had settled its dispute with the Maritime Union of Australia.

On 10 July, Lang announced the placement of 10 million shares through brokers BNP Equities at $2 each.

The Australian software development group Ci Technolgies - which reported a 48 per cent increase in interim profit to $6.885 million on Monday - rose four cents to $3.10 on heavy turnover of 462,000 with one special line of 330,550 going through for $3.05 in the last hour of trade.

Despite its exposure to Asia - a market which comprises 7 per cent of total revenues - Ci Technologies has managed to buck the trend of most small-cap stocks, and has outperformed the All Ordinaries Index by a stunning 35 per cent in the past 12 months.

The company declared an interim dividend of 6.5 cents a share, fully franked, 55 per cent higher than for the same period last year.

According to the managing director, Mr Tim Bosher: "Based upon existing market conditions and the addtional contribution expected from the acquisition, the directors believe that the company will achieve a second half-year result which exceeds that of the first six months."

SUMMARY: The benchmark All Ordinaries Index tumbled 19.7 points to 2608.0, after moving in a range of 2597.8 to 2627.7. The All Industrials Index lost 31.3 to 4613.1 points and the All Resources Index shed 10.8 to 984.8. Turnover was highest for the week with 262.43 million shares worth $953.37 million changing hands, and falling stocks outnumbering rising stocks 601 to 407.