Crane Shares Dip

Regular readers of this column over the last year or so will be used to hearing that when the major markets do well, crane manufacturers do particularly well. Even when the mainstream markets turn down, lifting equipment manufacturers have often held their ground in the past.

So May was a very odd month for the sector, with the mainstream indicators gaining ground between weeks 16 and 20, but with the crane sector dropping. The four-week period saw the Dow gain 2.68 % and the FTSE 2.18 %. Gains on the Topix 500 were marginal at 0.11 %.

But the same period saw IC's Share Index drop 2.35 % to finish at 208.92 points, its lowest point for about six months. The biggest percentage drop over this period was with Terex shares. Part of the problem is that at the time of writing the company had still not published full accounts for last year, or the first quarter of this year, due to an internal probe into its accounting procedures.

Terex is at pains to point out that even though it expects to have to state several years’ results, the corrections it is likely to have to apply will be relatively small accounting imbalances. The company has made a few preliminary statements about revenues and earnings for the last three quarters, but the continued absence of detailed information is clearly undermining the share price.

Other losses in the sector for Tadano and Hitachi, combined with Terex's slide, more than wipe out gains elsewhere in the sector.

Currencies

Another factor that weighed against the IC Share Index was the strengthening of the Dollar over the four weeks under review. The share index is denominated in Dollars, so the fact that the currency strengthened means the gains made by European and Japanese companies were diluted in terms of the Index. Put simply, those gains in local currencies were worth less in Dollar terms than they were four weeks ago.

But the improvement in the Dollar - a 3.68 % gain against the Euro, 4.01 % against the pound and 0.54 % against the Yen - will be welcomed outside the US, because it makes exports to the US more competitive. The movement will be particularly welcome in Europe, where Euro-zone manufacturers would like to see the Dollar and Euro on about a one-to-one parity, rather than the current value of one Euro at around US$ 1.26.