THE WEEK REVIEWED.

Auckland Star, Volume LXV, Issue 177, 28 July 1934, Page 4

THE WEEK REVIEWED.

GOOD AVERAGE TURNOVER.

STRENGTH OF GOVERNMENT STOCKS. RESERVE BANKS ON S4LE. The chief feature of a busy week on 'Change has been the increasing strength of Government stocks. It seems clear that most owners are holding their allotments ae .a permanent investment. In the case of big holders they mistrust the mortgage market as an outlet for surplus fundes, while individuals in a smaller way, who might like to take the handsome profit of £5 to £6 per cent, are at a lose to know where else to place their funds. Even industrials — if strict, unimpeachable security is insisted upon—show very little above 3M to 3V£ per cent as an average on outlay.

Supply and demand are, as usual, the determining factors. Funds available for investment are much above the requiremeiits of the country under existing conditions. Trade is restricted, and although there are definite signs of an improvement the movement has not as yet reached proportions of sufficient magnitude to absorb much surplus capital. Three per cent is all the present purchaser obtains if he places his money in 1940 Government stock at the current price of £105 10/. Investors are willing to accept thi.s rate for a six years' investment, but It" they agree to lock their money up til! 1955 they are able to obtain the equivalent of 3\i per cent per annum. How '.out? the present trend towards cheap money is likely to last it is impossible to say. One thing is certain—the pendulum will swing back as it always has done. The low ratee now ruling will encourage industrial development, both private and public, and money will again be forced to find an outlet in mortgages and other securities that have been neglected in recent years. This Dominion will not stand still: even now it is progressing, though tardily enough in all conscience. The time will come—it may not be so far ahead as many believe—when new industrial developments and fresh public works will increase the demand for money, and interest rates will rise as they have risen before. This in its turn will bring about an easing in the values of Government

stocks and other securities. Last week's business in Government etocke was entirely in favour of vendors, who obtained increases of approximately 10/ in the week. The "forties" issue changed hands on Thursday at £105 15/, but this rate was not maintained, and yesterday afternoon a parcel was transferred at 5/ less. Local bodies' debentures participated in the business. A sale of Auckland City ZM's showed a return to the present purchaser, based upon redemption at maturity, of just under 3% per cent per annum, while one of the Waitomo County Council's debentures returned just over 4% per ccut per annum. Interest Rates. The following table shows the return on Government stpek to the present purchaser, based on redemption at maturity:— Snip Accrued Return price. interest, p.c. p.a. Stock. £ s. d. £ s. d. £ s. d. 4 (1940) lOa li> 0 0 2 6 3 0 0 3J (1935-43) . 107 00 1 9 4 '3 00 •Free of income tax up to 1935, after which the stork has another five years to run with interest for the additional term at 4 per cent. Banks Up and Down. The banking section disclosed many irregularities. The public 'listing of the Reserve Bank shares naturally attracted special interest. It might have been expected that the newly acquired facilities ■for transfer would have brought about an increased demand and a firmness in the market, but actually results went in the opposite direction. The scrip opened with 6ales at £6 6/0, but this valuation wns not maintained. A elight but definite easing was apparent throughout the week, and at the last call yesterday a sale was put through at £6 5/6. This shows a return on outlay of a fraction under 4 per cent, and looks good buying according to existing conditions. It must not be overlooked that the .3 per cent dividend which the bank in permitted to pay is cumulative and the scrip is legally a trustee security. These provisions place shareholders in a. privileged position. It is, of course, an uncertain matter how long they may have to wait for their first dividend. Latest amendments to the Act under which the bank is to operate, and the accompanying discuseions in Parliament seem to indicate that the Consolidated Fund will have to bear the brunt of any mishaps in public finance. Nothing seems to have been given away which will impair the bank's prospects of earning profite on its capital. Now Zealand's' Decline Checked. Amongst trading banks New Zealands again had moat sales. The easing movement apparent in recent weeks was continued, but appeared to have been checked within the past few days. The lowest point was reached on Wednesday, with a sale at 45/6. Later, the shares recovered to 46/, and finally settled back to 45/9.. Australian banks were erratic. Commercials improved 3d with sales at 15/6, svhile Australasias slipped back 3/6 with a sale yesterday at £11 9/. New South Wales alone showed real strength, and buyers moved up to £31 —a rise of 15/ in the week. Unions failed .to find a place an the sales sheet, but transactions in the South from £9 17/6 to £10 represented an improvement. Trend of Market. The trend of the market since December of 1933 is shown in the following iable:— BANKS. Dec. Mar. July July 21, 30, 20, 27, 1933. 1934, 1934. 1934 Vustralasia ... 243/6 262/6 232/6 229/ :ommerclal ... 17/7 16/11 15/3 15/6 3.5. and A. .. 112/6 114/0 99/ 09/

Cut. (N.Z.) .. 81/ S2/6 76/ 76/ int., A'sin, con. 130/ 320/ 110/ 119/ *.S. Wales .. . G47/C 075/ 610/ 025/ sTew Zealand . 48/ 48/3 4R/9 45/9 Jnion 194/ 203/ 196/G 198/ teserve — — — 125/0 MISCELLANEOUS. Dec. Mar. July July 21. 30, 20, 27, 1933. 1934. 1934. 1934. T.Z, Insurance 57/ 58/3 61/9 62/ ioutli British . 77/ 76/0 80/9 81/ foldsbrouffh, M. 34/ C 33/3 20/6 29/6 !oloiilal Sugar 1270/ 1290/ 1315/ 1300/ oickland Gas. 24/ 24/9 20/7 20/6 Insurances.

The insurance section showed continued firmness. AH listed lines were in demand ! at each call, and sales made were at full late rates. New Zealands advanced still higher with business at 62/3, but this proved to be peak in the meanwhile, and a later transaction wae at 62/. Mining. The mining section was comparatively dull, and although a big list of miscellaneous scrip was quoted daily, only a small volume of business was put through. Waihis attracted fair attention at the beginning of the week, but after sales from £1 12/4% to £1 12/6 the inquiry eased off, and a final transaction was at £1 12/. Australian Issues. In Australia Government stocks monopolise attention, and the comparative neglect of general securities is reflected in the local demand, which has been comparatively quiet in recent weeks. Upon reports that operations have been resumed at ite principal worke, Mount Lyells again found support, and sales were made from 21/7 to 21/10. Colonial Sugars were easier, and although holders dropped their limite to £65 5/, the concession failed to induce business. Considering the unfortunate condition of the wool market, Goldsbroncth, Morte did well to maintain last week's position with, a sale at 29/8.1

Dominion Securities. A welcome feature in the miscellaneous section was the increased attention given to industrials connected with the building trade. This may be accepted as a reflex of the re-establishment of the Government subsidy. Consolidated bricks were traded in freely at 7/9. The timber section was represented in sales of Taupo Totara and Leyland-O'Brien, and Wilsons Cement had free sales between 30/ and 30/2. Gas shares only recorded a single transaction, one of the contributing issue, at 19/. Investors are probably waiting to see the issue of the protest that is being made in Parliament against the provisions of the latest tariff. Latest Sales. I Sale* completed since last review have been as follow:— Banks.—New Zealand, £2 6/, £2 5/6, £2 6/ (2), £2 5/9; Reserve, £6 0/6 (4), £0 0/ (4), £6 5/9 (3), £0 o/O; Australasia, £11 12/6, £11 9/; Commercial, 15/0. Insurance.— New Zealand, £3 2/3, £3 2/; National, 19/U; South British, £4. 1/ (2); A.P.A., 10/1. Government Stock, etc.—4 per cent, (1940) £105, £10.1 6/, £1.05 15/, £105 10/; (1046) £107, £107 5/; (1919) £107; (1955), £107 7/6 (2), £107 10/; SV2 per cent (1938-52), £107. Auckland City (1949), 5%, £100; Auckland Harbour Board, 5 ] A (1962), £105, (1939) £102 10/: Waitomo County Council, 5% (1950), £103; Booth, Macdonald, 6% (1937), £71 10/.

Mining.—Waihi, £1 12/4%, £1 12/4, £1 12/6, £1 12/; King Solomon, 3/U (2); Matald, 2/2%; Big River, 1/2; Skippers, Sd; Rawang. 9/1; Okarito, 8/2; Gillespic's Beach, 1/10%; Nokomai, 3/5. Australian, etc.-—Mount Lyell, 21/7, 21/8, 21/9, 21/10; Loan and Mercantile, £50 (3); Goldsbrough, Mort, 29/8; Kauri Timber, 18/3; British Tobacco, £1 17/.

Dominion.—Consolidated Brick, 7/9 (0); Leylnnd-O'Brien, 22/7%; Taupo Totara, 5/1, 5/; Wilsons Cement, £1 10/ (3), £1 10/2 (2), £1 10/1; Farmers' Trading, 6/2 (2), 0/3, 6/2, (B pref.) .14/; Sun News, 4/3; North Auckland Farmers' (B prof.), 5/; New Zealand Newspapers, £1 10/3, £1 10/; Farmers' Auctioneering (£5). £3 15/, £3 10/, (£2) 10/; Auckland Gas. con., 10/; Northern Steam. 6/ (2), con., 1/2, 1/4; Now Zealand Breweries. £2 2/9; Farmers' Fertiliser, 20/6; Now Zealand Refrigerating (con.). 8/7;' Milnevand Choyce (deb. stock), 18/6; Farmers' Auctioneering (B prof.), 20/0; Renown Collieries (new prof.). 1/3. Unlisted.—lnvestment I'.xoc. Trust. 2nd B deb.. £94 10/ (2); Woolworthe (Syd.), ex rights, £3 3/3, £3 3/0. £3 4/; New Zealand Perpetual. Forests. £2 11/; Mettere (N.Z.). 5/; Golconda Holdings, 1/S (3); Silk-knit, 23/6; Snowy River, 2%d.