THE WEEK REVIEWED.

Auckland Star, Volume LXI, Issue 15, 18 January 1930, Page 4

THE WEEK REVIEWED.

YEAR STARTS POORLY. FINANCIAL BAROMETER WOBBLY. PRICES STILL DOWNWARDS. It is a little over a week since the local stock brokers reassembled to commence the New Year's business, but so far as actual sales are concerned the results are far short of a usual weekly P6 As' d \vas feared would be the case, the market opened without animation, ana although more stocks are \emgquoted than was ♦ the case during the first day or two, sales are few in number, and there is a definite lack of buoyancy m the market. . . In a few cases of popular Dominion securities values are still held fiim y> u in the main the downward trend continues. - How Banks Have Dropped. This particularly applies to banking .'shares, most of which have dropped com- ' pared with the prices ruling immediately prior to the Christmas vacation. iney were low before; they are still lower now. The following _ table shows the variations in the leading lines, approximate values being shown:— Dec. 10 Jan. 16 (1929) (1930)

It will be noted that New South Wales • jj' the only bank whose shares have appreciated in the interim, and at £41 they are worth just £10 less than they were a year ago. Where Is the Bottom? With a. return on outlay of from 4% per cent to. nearly 6% per . cent, according to the particular scrip favoured, it .is ' worth serious consideration by investors whether bank shares are likely to go lower. It is true they , are still weak and drooping, but there is a bottom somewhere, and when it is reached the reaction may come quicker than some people imagine. The writer expressed the opinion some months back that leading bank shares for permanent holding were worth buying at any time with a return on outlay of about 5 per cent. Nothing has occurred in the interim to alter this view. Profits and Dividends. < • Stock markets are more _ susceptible than any other to psychological factors, and prices move up and down, very often with little relation to actual values as demonstrated by balance-sheets and profit and loss accounts. In this connection the earning powers of the various Australian banks, based on past results,- are clearly indicated in a useful table compiled by • J. B. Were and Son, Melbourne brokers. The table gives .the percentage of profit required for maintenance of dividend dur- . ing the past four years:— v

Investigation of the above shows that, with the single exception of the Union, which has reduced its' dividend rate from 15 per cent to 12Vz per cent since the table was compiled, there is a substantial margin of profit over and above the amount required for " dividends. Profits are ,expected to be less in 1930, and the decrease may be prolonged into the next yearly term, but only the most confirmed ( pessimist would suggest that after a . couple of seasons the earning powers of i these banks will not be at least equal , to those ruling during the last few years. . Special prominence has been given to , the position of bank shares, because both here and in Australia they appear to have had to take the first shock of a fall in security values that must naturally follow the tightness of money in the Commonwealth and the consequent rise in interest rates. •■••••■ Stalemate in Gilt Edges. Prior to the holidays Government : stocks successfully withstood the downward trend of values but the action of the Government in making an over-the-counter issue at 5Yz per cent has temporarily knocked the bottom from existing issues. Holders are not prepared to meet the altered conditions and not a single sale of Government stock has been announced since resumption of business. Municipal'and other debentures have been likewise affected, for. it is recognised that these, too, must be subjected to a readjustment. Too Hot for Coals'. A section that showed marked activity until the. close of the year was that devoted to' coal companies shares, but these have since fallen as fiat as the proverbial pancake. It may be a seasonal change, but it is unusual to find such popular lines as Pukemiro, Grey Valley and Taupiri all quoted without response from buyers, as was the case when these notes were written. Insurances Ease at Last. With insurance shares easier in value there has been fair business in both New Zealands and South British, which are moderately stable at £2 4/6 and £3 1/6 respectively. Breweries in Demand. New Zealand Breweries debentures are now off the market and renewed interest is being taken in the shares, which have sold at £4 7/6 to £4 8/3. Staples Breweries, too, have been in steady request, selling from £2 15/ to £2 15/3. Australians Weak. Australian securities are still very weak ..and Colonial Sugars'were offered yesterday 'at £44 10/, with best buyers £43 5/. A year ago the same scrip was worth £61. ' Goldsbrough Morts are offered at £1.15/6, with no buyers. In January, e °Higher interest rates u l stl f y of these market fluctuates, but notallol ♦hem It would almost seem as if AusbarsSV I "the investment counter. ■ Gas Firms Up. There has been the usual steady inqmry for Auckland Gas at about' £1 company's financial year dosed on JJecem ber 31, and in view of an expected diviclena announcement shortly the scrip firmed with a sale at £15/ yesterday. Mining Flutters. . There lias been some interest during the week in, Moanataiaris, based on encouraging reports received from the mine. Ohuiemuris o ji the other hand have dropped from 8/3 before the holidays to 0/ yesterday, as the result of the report , cru ®' ime , "Potations not having come up to expectations.

£ 8. d. £ s. d. • Aus. of Com. .. 19 3 1 8 0 Australasia 12 13 0 12 10 0 Commercial .... 1 a a in n National of N.55. 6 13 0 0 10 0 New South Wales 40 0 41 0 0

1925-20 1926-27 1927-28 1928-29 p.c. p.c. p.c. pic.. Aug. Com. .. 70.8 75.9 81.5. 80.8 Adelaide .... 83.5 85.8 89.4 85.9 Australasia .82.2 85.8 85.6 88.1 . Cora, of Syd. 72.1 72.2 72.2 72.4 Com. - of. Aus. 51.2 58.2 08.8 72.7 E., S.' and A. 54.4 i 54.5 63.6 63.4 National 70.4 68.8 77.8 75.8 N s>w . 68.3 72.3 79.0 75.4 Queens. Nat. 71.9. '73.2 81.2 82.3 Union .83.6 ; 83.6 , 88.0 98.0