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Christmas 'window-dressing' theory rejected in stock slump

By Nicholas Bryant and Nick Stride

Friday 1st December 2000

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Dismal trading volume on the Stock Exchange this week has puzzled brokers and left them dreaming of the beach.

Many a thumb was twiddled this week as the Stock Exchange suffered a dearth of buyers.

But even in light volumes selling was sufficient to scar what should be some of the market's strongest stocks.

Baycorp Holdings, The Warehouse and Lion Nathan all fell, despite trading well in their chosen markets, with Lion losing 38c in two days this week.

Cavill White Securities analyst John Cairns said Lion Nathan had had a good run in the first half of November, rising from $4.90c to $5.80c but profit taking had caused this week's fall.

A further factor was Lion's announcement on November 10 of its 13-month result.

It showed trading in the extra month, September, had been weaker than expected.

Analysts also attributed Baycorp's decline to profit-taking.

There had been no news, other than founding director Charles Bidwill selling his stake in the company six weeks ago, likely to affect market sentiment.

UBS Warburg analyst Malcolm Davidson said thin volumes in trading of The Warehouse indicated selling was coming from retail investors.

One issue was the announcement at the annual meeting that sales from the recently acquired Australian operations had been 10% below budget for November in a soft retail environment.

Another was the dilutionary effect of the issue of 23 million new shares to the vendors of Clint's Crazy Bargains and key employees.

Mr Davidson said the dilutionary effect worked out at 28c a share.

Another to suffer in November was Advantage Group, though continuing edginess on the Nasdaq and institutional reweighting of industrial stocks may account for its recent slide.

It has been suggested the Advantage share slump was a result of annual Christmas profit-taking or "window dressing" by institutions with December financial year reporting dates.

But analysts said it was a bit early for that. It is also unlikely it is foreign investors fleeing these shores as most are likely to be watching the New Zealand dollar for any sign of a resurgence in value. At such weak exchange rates a "sit back and see" approach is considered more likely.

That leaves retail investors - local punters short on commercial action in a quiet economy who need to get their hands on some cash for Christmas.

Normally their behaviour is not considered capable of leveraging stocks too greatly but with so few buyers it is apparently not to be discounted.

The only stock giving brokers anything to do appears to be Fletcher Energy.

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