Friday, January 1, 1999


Isle stocks miss
another bull run

Only 4 companies
ended '98 with a gain

By Rob Perez
Star-Bulletin

Tapa

Investors in Hawaii stocks probably have a terrible hangover today, and it's not from anything bubbly.

They just wrapped up a wretched, wretched year.

While the major stock market indicators posted double-digit gains for 1998, continuing an unprecedented bull run, 20 of the 24 local-interest stocks that the Star-Bulletin tracks fell in value, many significantly.

And market watchers don't expect much of a change this year.

"We're going to have to grit it out again," said Paul Loo, senior vice president for Morgan Stanley Dean Witter in Hawaii.

The general decline in Hawaii stocks was attributed largely to the state's struggling economy. As the economy goes, so go the stocks.

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That's why market watchers are anticipating little change for 1999. Like economists and others, they don't expect the economy to show much improvement this year.

"I don't think we'll see a broad-based advance," said Colin Watanabe, branch manager for National Securities Corp. in Honolulu.

At least two of the four companies that posted gains for the year benefited from business on the mainland, where the economy is thriving.

BancWest Corp., the company created by the recent merger of First Hawaiian Inc. and BancWest, parent of California's fifth-largest bank, recorded a nearly 21 percent gain.

Schuler Homes Inc., which in recent years has acquired mainland home builders to balance its sluggish Hawaii operations, posted a 10.68 percent increase.

The biggest gainer was Hawaiian Natural Water Co., which saw its stock double in value, more than making up the ground it lost as 1997's biggest loser. The company bottles spring water from the Big Island and sells it nationally and internationally.

"If you didn't get out of the islands and diversify yourself, you had problems," Loo said of the companies with primarily Hawaii operations.

The eroding value of Hawaii stocks was in marked contrast to the general market.

The Dow Jones industrial average, the most watched market barometer, was up 16 percent for the year. The Standard & Poor's 500 index, a broader market gauge, climbed nearly 27 percent. And the Nasdaq index soared almost 40 percent.

The biggest loser locally was Hawaii Land & Farming Co., which plunged 94 percent. Formerly called C. Brewer Homes Inc., the land developer recently was delisted from the Nasdaq market because it's market value fell below Nasdaq minimums. It now trades on the over-the-counter bulletin board.

Another big loser, Cyanotech Corp., the Big Island-based biotech company, fell nearly 62 percent in value. The previous year Cyanotech's stock also was among the biggest losers, dropping 57 percent.

With the exception of First Hawaiian's parent, the state's banking companies also saw their stock drop in value, a direct reflection of the sputtering economy, analysts said.

Watanabe said Hawaii stocks also were hurt because most are considered secondary issues and the secondary market has not been as active. In addition, the state has no publicly traded Internet companies, a segment of the market that has seen dramatic gains, he added.

"Unfortunately, we've got a lot of things working against the Hawaii equities market," Watanabe said.



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