STOCK EXCHANGES

Ashburton Guardian, Volume 56, Issue 74, 9 January 1936, Page 7

STOCK EXCHANGES

PROSPECTS IN AUSTRALIA. BANK SHARES SHOULD APPRECIATE. Discussing Stock Exchange position at the close of 1934, a Melbourne correspondent stated that the Exchange closed with a fair amount of strength in general investments, hut with a decided weakness and lack of interest in gold-mining. Speculation in gold-mining is assuming more reasonable and rational proportions, and the past year has been noticeable for the decided change in the assessment and prospects of the many mines floated during the recent gold-mining boom. As was inevitable in a period of frenzied speculation, the company promoter has left behind him a trail of failures, but the past year has definitely proved that many of the Australian mines are- capable of showing substantial returns upon the capital invested, and appear suitable for investment. These are the features of the present gold-mining position. It is certain that next year a large number of companies will disappear from quotation and leave only those of joroved investment worth behind them.

For gold-mining, then, we can expect a general consolidation, and for those mines definitely proved, shareholders can look forward to a period of increasing returns. On the investment side, the gains throughout the year have not been so spectacular as those recorded in previous years, but, nevertheless, there has been a decided improvement in individual values and ip the market in general. Banking shares are only just beginning to return to favour, and it appears that the current year offers the greatest opportunity since mid-depres-sion. It would seem that among the list of securities the banking group offers the safest and surest prospect of improvement and capital appreciation. In general industrials, the outlook appears to be quite favourable, but the future seems to promise a general consolidation of the position rather than any further immediate increase in general values as distinct from individual values. The prices of the Barrier stocks rested upon a precarious basis, and the price of silver dropped heavily through the lack of buying support of the United States. Now that China has definitely abandoned a silver monetary standard and practically demonetised the metal, one of the declaied acts of America,in attempting to raise the price of silver to increase til© purchasing power of the East is dealt a death blow. In addition, the abandonment of the N.R.A. by the United States, and the present tendency of the Government to interfere less in business, make the forecast of the price of silver a matter of difficulty when it is dependent almost solely now upon American policy. Reviewing the gilt-edged market, it is interesting to compare the prices or Government stock with those obtaining at the same time last yeai. Interest rates have moved to higher levels, and prices of Government stock have shown a decided fall in value. Present opinion seems'to suggest a further fall in value for the coming year as interest rates move to higher levels.

Generally speaking, the coming yeai seems to indicate a further consolidation in the general position, with the prospects of gains in certain undividual issues and one or two selected groups of which the banking section seems to bo outstanding.