Hi-tech Rush Leaves Plenty Of Bargains
Sun Herald
Sunday March 5, 2000
THE booming sharemarket is set to break its record tomorrow after a 202-point rise on Wall Street yesterday.
But brokers offered little hope to shareholders in blue chip stocks such as Brambles, AMP and Boral, left behind in the rush to Internet-type and media stocks.
News Corporation, already Australia's most valuable company, worth $106 billion, could run as high as $30, brokers said. Telstra is also expected to soar.
At one stage, the Dow was up 278 points on a report showing job growth last month had slumped to just 43,000, way below the expected 228,000 and unemployment rose, suggesting the US economy is slowing without the need for a feared interest rate rise.
The share rises were across the board, although the Internet specialist exchange Nasdaq soared 3.4 per cent to a record 4914.8.
``The rise in our market is only due to a dozen stocks," warned Dickson's broker, Michael Heffernan.
``Take News Corporation out and it's actually a pretty weak market," Mr Heffernan said, adding ``there are plenty of bargains now."
Brokers expect the market to climb about 20 points tomorrow, but led by only a few stocks such as News.
``This is a very selective rise favouring biotechnology stocks the market is still waiting for News Corporation to pause for breath," said director of BNP Equities John Bowie-Wilson.
Telstra shareholders can take heart from overseas where British Telecom shares jumped 8pc last night.
``There were indications that people were switching from Optus to Telstra last week," said Mr Bowie-Wilson.
Mercantile Mutual head of equities Peter Mouatt said the market's performance ``depends on News Corporation, which was very strong last week. The question is whether it can retain those levels," he said.
``People are talking about News reaching $30 and it is possible but there is a risk the market would take a cynical view because Murdoch is selling (40pc of the Platform Co) assets, and considers it overvalued."
Mr Mouatt said good company reports and a long-term bond rally stimulated a market which was tiered, with ``old economy" stocks not doing much compared to technology stocks.
``I think some of these stocks are oversold, such as NAB on a dividend yield of 5.8pc, and they will catch up," he said.
Orica the old ICI Smorgons, Goodman Fielder and Howard Smith also stood out.
The low Australian currency was good news for exporters and this was also stimulating the stock market, but Mr Mouatt said the dollar could strengthen because easing pressure in the US for interest rate rises lessenedthe potential difference betweenthe two nation's rates.
MARKETS
Week Latest
New York up 505 up 202
close 10,367.2
London up 290 up 55
close 6,487.5
Tokyo up 110 dn 138
close19,927.5
Sydney up 102 up 6
close 3,225.8
The dollar up 0.68? US60.84?
SHARES
Week's Week's %
close change
Best Threes
Virotec 31? 83? 78
AMX Res 74? 26? 54
Omnitech $1.39 44? 46
Worst Threet
Terrex Res 12? -3? -20
Delta $1.85 -41? -18
Imperial 23? -5? -18
© 2000 Sun Herald