City File: Sector ills blight healthy building firms

THE rain falleth on the just and the unjust alike: on the majority of building shares that look at best unhealthy, at worst destined for the knackers' yard, and on the tiny minority with decent prospects.

The market suddenly decided it had overvalued two of the best: MJ Gleeson, which has tumbled from 850p in mid-July to close on Friday at 610p, and Bellway, which has fallen from its post-election high of 309p to 228p.

Both look to be exceptions. Bellway has a solid base in the North-east, where its house sales were actually up in 1991- 92; an increasing involvement in the Government's urban regeneration programme; and a land bank bought at bargain prices with the proceeds of last year's rights issue. Meanwhile, Gleeson specialises in two relatively recession-proof businesses: work for housing associations and regional water companies. Even in the building trade, falls get overdone.

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