Let the stock market olympic games begin

THE diving dollar and interest rate fears have knee-capped the stock market since the All Ordinaries Index hit a record high of 3,330 at the end of last month.

Analysts are now churning out a long list of “hold” recommendations. These are about as useful as a chocolate frying pan, especially if you do not own the shares in question. Brokers are loath to hang sell labels on large companies in case they lose out on some corporate advice business. So not much help there.

The swift run up in share prices in recent months was largely liquidity driven. Fund managers came into the new financial year with $590 billion under their belts, $68 billion more than the previous year. The superannuation pool continues to deepen and now accounts for around 17 per cent of Australian household wealth. A slice of the new money has to go into Australian equities. The liquidity argument is very good … until the day it stops.

Now we have a change in sentiment. Analysts who only weeks ago would have greeted recent corporate profits with a Mexican hat dance, are casting their rheumy old eyes over them, looking for warts.

This is the time when our short-term speculations become our long-term holdings. Or we get the jitters and bail out. But it is just as hard to time an exit as an entry.

Perhaps the Olympic flame will rekindle the feel good factor. The share prices of some companies that will get massive international exposure during the games have been allowed to fall into attractive territory.

An estimated A$1.5 billion will be spent in and around the stadium at the five-ring circus. A lot that will go down throats parched by cheering. As a major sponsor to the games, Foster’s will have a matchless showcase for its beer. Foster’s shares have dropped from $4.65 to just over $4 since the $2.6 billion purchase of California’s Berringer Wines Estates. This may present a buying opportunity.

Southcorp, another unwanted stock of late at around $4.40, has the exclusive rights to sell its Lindemans wines to spectators. The company has shrewdly invited the major American television networks on a tour of its Hunter Valley vineyards – maybe giving Southcorp a lift in the US, where it is already the sixth largest seller of Chardonnay.

Pacific Dunlop, unloved at $1.54, will be bouncing around everywhere in Sydney. The company is expected to sell more than $100 million worth of T-shirts, sports goods and other apparel. It is supplying Berlei sports bras to the Australian women’s team, along with 23,000 “Sleepmaker” beds for the Olympic village.

Pacific Dunlop’s Ansell unit is offering the 10,200 athletes an astonishing number of condoms – up to three a day by some reports!

Qantas will be flying in many of the overseas visitors – including 260 horses. The share price had been recovering from the turbulence caused by extra competition on the domestic routes, but it lost altitude again on fuel price concerns.

At $3.60 Qantas are well underpinned by the fully franked yield of more than 6 per cent.

Channel Seven shares are an obvious Olympic play, but they have bolted to $7.80 following the recent bullish profits bulletin, and the picture is little fuzzy.

An alternative might be Television and Media Services, which has the contracts for many outside broadcasts during the two-week festival.

What could be the safest bet of all little looks a little fishy. Few of the half a million interstate and overseas visitors to the city will have tickets for every day of competition, and they will be seeking other diversions.

A good number of them will find their way through the turnstiles of the Sydney Aquarium, whose shares are modestly priced at $4.15.

Let the Games begin.