Dear Prudence?

When Greene King published its trading update on Tuesday of last week its shares immediately shot up, to the bewilderment of even some of the City's leading analysts.

The numbers in the brewer's statement and, as importantly, its tone, gave the stock market a fillip. Shares in other pubcos assumed a similarly sunny disposition, despite what we all know is a tough market for all operators.

But the next day 'normal service' was resumed. The sector's 'bears' had Punch Taverns to thank for pubco stocks diving like the proverbial gannet, its decision not to pay a final dividend payment to shareholders sending all sorts of signals to investors. And this despite Punch publicly stating again that its pre-tax profits will be within consensus forecasts. Are we to stop taking the word of Giles Thorley and his ilk as 'read'? One would hope not.

Though somewhat hushed when shares rise, a company's management will argue that downward pressure on a stock has little bearing on its overall corporate progress. Executives of every listed pubco witnessing shares halving in value in the last year will say they are doing the right thing by the long-term strategy of their business.

But hey, highs and lows in a company's share price reflect how investors see both the sector and the company concerned. Looking at the declines we've seen during the last year, the writing is pretty clear for all to read.

That said, while being a significant u-turn - after all, it was only a few months ago the group's chief executive Giles Thorley was sticking to the line that it would pay a dividend - Punch's move is a generally prudent one.

In this market, and bearing in mind its financial issues, paying off debt and pumping more money into its pubs is probably better than chucking money at shareholders.

But Punch's institutional shareholders - and doubtless some of its smaller ones - view such regular payments as part of their investment strategy.

One suspects they will be expecting much in the longer term from Punch's side of such a quid pro quo.