INVESTMENT MARKET REVIEWED.

Auckland Star, Volume LXVIII, Issue 120, 22 May 1937, Page 4

INVESTMENT MARKET REVIEWED.

AN ERRATIC POSITION. LONDON ON HOLIDAY. AUSTRALIANS QUIET. BANK OF NEW ZEALANDS IMPROVE. Since last review the Stock Exchangee have passed through dull times. The overseas position has not been helpful, as the holiday spirit which pervades Great Britain has slowed down investment business, and there is little life in the market. Yesterday's cables from London indicated ! lower prices for gilt-edged stocks. How- j ever, the trading position in the Old j Country is very sound and, with the ter- i initiation of the holiday season, values I should soon recover unless in the meantime some fresh international complication should arise and cloud the horizon. Business in Australian issues lias been in smaller volume than lias been the case tor a considerable period. Investors may welt be puzzled by the fluctuations in base; metal prices, and until something approaching stability is reached on the world's markets the shares of companies interested in copper, lead and tin are scarcely likely to reach the high levels that ruled a month ago. Very little business was recorded in this class. Not a single sale was registered in Mount Lyells. Electrolytic Zinc preferences hail sales between 57/9 and 58/2, but there were no transfers of the ordinary shares. Broken Hill Proprietary had a few sales at 81/9. showing a drop of 2/3. A general easing trend was evidenced in sales of British Tobacco from 50/3 to 49/6, and Australian Glass, which declined from 92/9 to 91/9. The stimulus imparted to rhain stores by the announcement of negotiations between the directors of Woolworths and G. J. Colee failed to last and tlio shares in both, enterprises slipped back further, Woolworths from £7 10/ to £7 8/6, and Coles from £5 10/ to £5 9/6. Colonial Sugar's Good Year. The one really bright spot in Australian industrials was Colonial Sugar. Quite recently it was announced from London that the presence accorded to Australian sugar would 06 continued as in the past. This seems to assure satisfactory employment for the huge refineries of Colonial . Sugar and for its groat financial resources. Close on the heels of this announcement came the publication of the directors' half-yearly accounts. These show greatly increased net profits at . £546.016, and the dividend rate has been raised from 6% per cent to 7% per cent ; per annum. The financial position, i which has for years been one of amazing solidity, has been further strengthened by the addition of £100.000 to reserves and setting aside £271,168 for depreciation. Under the circumstances it is not surprising that the shares (£2O each) firmed up, with final sales at £46. Banking. j A feature of the banking section wae a week-end improvement in New Zealands, which opened at 43/9 and finished up at ( 44/3, with more wanted at that price. During the week notification wae pub- ' lished in the "Star" ot an important city deal, whereby the bank secured a site - adjacent to its present premises in Queen Street, with a view to building expansion. ' The market is justified in accepting this - as a particular mark of confidence on the : part of the directors in the future of the ■ country's leading financial institution, and 1 especially of its Auckland connection. The board as now constituted is mainly com- ' prised of Government nominees, who may 1 be expected to enjoy the confidence of Cabinet. Based on these facts and pre- * misos there would appear to ho little jus- ■ tification for the fear which had depressed 1 tht> market during the last 12 months 1 that the Government might take some 1 drastic action imperilling the share- < holders' interests. ; Next month the customary half-year's • dividend of 1/ per share is to be paid, } and the return to the present purchaser. based on a continuance of the 10 per cent dividend rate, is approximately 4% per ' cent, a figure well above the return avail- ' able from most sound industrial concerns, j If the dividend should be reduced next financial year to 8 per cent the return on * to-day's value would still be over 3% per cent per annum. ' The latest returns issued by the trad- . ing banks doing business in the Dominion \ for the period ended April 26 showed an ; increase in advances, the figures being / £47,4&>.<m. against £4,1.400,000 at this ( . time two years ago. This weuld seem to * indi.-iitp that, despite the loss of the dairy c produce bu«ii>CKs coiiiiniinilcprril by the Government—a loss that would be particularly felt by the Nrw Zealand- there is still a satisfactory volume left for the banks. The D mortgage shares issued by the bank, which have boon very "sticky" jn recent months, showed a slight improvement yesterday, with business at 26/9. ° This gives a return to the present pur- "' chaser nt above 5% por cent per annum. ' A couple of years ago these shares were K selling at 34/. and the present low rate is I entirely duo to the fonr—-n fear that may 5 bo quite unfounded—of Government inter- f feronce. 1! The shares of tbo National of New '•• Zealand also hardened up, and buyers who ,- moved up to 64/ were unable to secure y supplies, holders standing out for a sliil- t ling higher. Australian banke wore quiet, both Com-' mercials. Now South Wales and E.S. and hj A. selling at lower rates. Tho announce- f ment (hat tlie National of Australasia had [ ~ earned tho highest pro-fits since 1030 failed ; to lift tlio market, and the contributing j f, irtwnc of this bank was offered 2/ lower at i j; £7 15/ without attracting a counter offer | p from buyers. Insurances Improve. Business in insurances was again quiet, but tl / c was a slightly better tone, especiany for New Zealands, which moved up from 61/9 to 62/3. Fixed Term Securities. ti Turnover in Government stocks was | si comparatively small. There were regular I m buyers at full late rates, but sellers were ! gi scarce, it remark which also applies to the j tl better class of local Government deben- F tures. ta Mining. bi Mining was again a very dull section, a °' feature being further weakness in , Marthas, which sold ex dividend from 18/ J?' to 17/. This may be attributed to the '' uncertainty which still exists in regard *' to the gold position in world markets, ind to the fluctuation in price of tin. , Mount also slipped back further '** with sales from 13/4 to 13/, but recovered " l iharply on the strength of a cable from Mel- ! n >ourno to the effect that a dividend would ln ie paid in July. There were no sales of s ' hedging scrip or, indeed, of any Dominion- '" nvned company. A strong plea for a tl nore favourable attitude on the part of tl :he Government toward the mining indus- w :ry was contained in the annual report te Df the Golden Dawn Company. The "hairman of directors, in urging the aboli- I. ion of the gold tax, quoted the following fei igures: — re £ s. d. cc Paid-up capital of company 1f).1>63 19 0 Amount spent in wages .... 107,845 0 0 Jost of development work. . 35.110 7 4 Amount of special gold duty paid 20.90 C 0 0 Amount of dividends paid by Company 4,000 0 0 ac The above figures certainly offer little A :ncouragemeut to investors to invest "' noney in gold mining. " Dominion Issues. x Generally speaking, there wae a slight cl endency to improvement in miecellaneous w * Dominion issues. Auckland Gas shares g i vere in steady demand at £1 1/, and the :ontributing issue moved up to 15/2. Wilions Cement had considerable business at :he comparatively low level of 32/6. Far- * ners' Fertiliser, Farmers' Auctioneering B preferences, National Timbers, Bycrofte, Silknit and Traders' Finance were all 3( traded in at about late ratee. Shillings, Z< Limited £1 eharee changed hande at 19/7. Si

Companies' Problems. Something of a flutter took place in Brewery ehares, on the announcement that | negotiations were proceeding between the directors of Xew Zealand Breweries and Staples, for the purchase of the aeeete of the latter concern. It has been suggested that new capital might be sought by Xew Zealand Breweries to consummate <yie proposed deal, in which case there might be some epecial "pickinge" for present ehare. holders. With these rumoure as a foundation the shares of New Zealand Breweries ! moved up from 62, 9 to 64/, after a slight I hesitancy in between —they were on offer | on Wednesday morning at 1 Staples rose from £1 14/4%, the last sale! in February—first to 50/9 and later to 53, 9. I During the week several important in- I duetrial companies have held their annual j meetings in the various centre*. In motst I cases reasonable profits have been earned, j ■ but a distinct note of apprehension in | ! regard to the future has been sounded by j j company directors. At the annual meet- j J ing of the old-established Taupiri Coal ! Company the veteran chairman of direc- ' I tors, the Hon. E. W. Alison, stated that when the full effects of the Government's industrial legislation became operative, as it would during the current term, the company would have to earn a net profit of £12.000 before a dividend of 1/ a share could be paid on ordinary shares. As bo such profit has been earned since ]!)31 it will be seen that only an extraordinary expansion of output will make it possible for the dividend to be earned. Xet profits and dividende since 1930 have been as follow:— Year Net Profits Div. per cent 1931 13.-536 ft* 1932 2,409 G 2 5 5 11)33 6,343 6 2-5 S 1934 »12,248 6 2-5 — 1935 1,134 6 2-5 1936 8,042 6 2-5 B 1U37 7,813 6 215 ft Trend of Market The following table indicate* the fluctuations m the valuee of various °&t *$#• "&£• Abasia h M- 5 if* *,*«;[ Commercial 019 o Ola 4 019 " ' E.S. auU A. 519 O 610 O 6 l> «| Nat.. N.Z. 340 338 340, v\-'vv A | US - , 77 « 717 0 714 0 £- s - Wales Ho 0 o 37 17 0 37 ii' u N. Zealand 216 230 2 4 3 Umou ... 10 7 « 11 4 0 11 4 a MISCELLANEOUS. v- 1 t £ 8- d. fi 8. d. £ g. d N.Z. Insur. 3 0 « 3 1 9 3 ' s S. British 414 3 414 0 414 C i-iolds., M. 115 9 118 6 11« o & iinc l 0 ° » • S" « (pref.) . 212 0 218 6 217 9 Col Sugar 43 5 0 45 10 O 46 o 0 Auck Uas i 3e 107112 N.Z. Brew. 214 0 306 340 Dom. Brew. 118 9 2 26 220 GOVERNMENT STOCK. 19391- ioi Pi n J O4 a " °" &* "d« t,,fo"?? 10 - ° ° i»a 10 0 'ioi 5 0 Uu3-u7 — 9 8 12 e 88 12 0 I Latest Sales. Sales completed since the laet review have been ae follow: Banks.—Xew Zealand. £2 3/9 (2) £2 4/ el 4 £ $0' t? 4/ l (2) ' (D »or ( tjig?j 2 2f b/fl, il i,/9; Xew South Wales, £37 r>,o SSBr/owff.a.^nTrf 9% 2 ii>: Government Stocks, Etc.—Bonds, 4 per « 1 °/- Auckland Electric Power Board, April 30, 194547, £103 10/ (2) • Waikato Carbonisation, £90 Mining—Martha (ex dividend), 18/, I Wi 'i^ 3 /,i 17/ » (3 ? : Mount Morgan, 13/4 13/ U/6 (3); Broken Hill South, £2 11/6 Australian. Etc.—Broken Hill Proprie- ;-» T ,'-^ 4 i' 9 (i : Electrolytic Zinc (pref.), i £ - i'/O- *2 18/2, £2 18/, £2 17/9; Hume in? e '^T 19 A 0; Woolworthe (Sydney), £7 10/, £7 9/, £7 8/6, (righte) £5; Austrahan Iron and Steel, (pref.) £1 (i/8; G. J. }%'' n , £5 9/6; Britieh Tobacco, i 2 10/3, £2 9/6; Yarra Falls, £2 1/6; Australian Glass, £4 12/0. £4 12/3, £4 \\r i ; . C ° lonial Sugar, £45 15/, £46; Waldas Shoee, £1 0/6; Dunlop, £1 1/ Dominion.—Auckland Gae, £1 ]/'(3), &U 5/1 'J 5/ 2, (2 l ; Witeons Cement, £ I 't \('};, y Z? th Auckland Farmer*, (B f/i? } IV-'u- Taranaki Oil, 5/, 4/10, 4/8. 4/b; Shilhnßs, 19/7; New Zealand : ?/e eW^ ie S/ *% 2/ -°'- £3 t, 2/6 ' £3 3/9 - £ 3 J/0, i.3 4/; D<-minion Breweries, £2 */3 (new »ue), £2 1/3; Staples, £2 10/9, £2 /1 '«/ a l mere Auctioneering, (B pref) £1 2/; National Timber. 12/6; Bycroft j £? Traders , Finance. 13/9. (con.) 4/9 ' 2 ; Kaitangata, £1 2/; Silknit. £2 2/fl (3 ; Fanners Fertiliser. £1 ]/ ; Con- : f solidated Brick. 8/: Xew Zealand Rcfii-j 1 geiating, (con.) B'9Ms