THE WEEK REVIEWED.

Auckland Star, Volume LXIX, Issue 250, 22 October 1938, Page 4

THE WEEK REVIEWED.

POLITICS AND SHARES, j INVESTORS ARE WORRIED. LOCAL SECURITIES WRITTEN DOWN AUSTRALIAN ISSUES PREFERRED. Political reactions are still the dominant tactor in the local investment market, lite return to power of the Labour Oo\ ernment with an overwhelming majorl > was \ icwed with something approaching consternation by the market. The buoyancy ot pi e-eicction days was replaced by temporary stagnation. For several calls tliei e was practically no demand for New Zealand securities and on the buyers' t 1 Quotation list a Ions; series ot blanks provided striking evidence of the state of the market. Meanwhile a strong demand set in for Australian securities. whose inherent strength was further stimulated by a sharp 1 iso iu tiie metal markets and general improvement in the International situation. This state of affairs was modified, but onlv fdigtitly. in the latter part of the week, when buyers for Dominion securities made hesitant approaches. Limited business was then pni tTirougli at what may bo described asi "bargain prices." The net result was that in miscellaneous securities there were three sales of Commonwealth to every one of New Zealand, the former being dealt with on a market and the latter 011 a falling one. J he rush for Australian securities was exemplified in the seope of'the. demand, which covered a wider area than at any prev UK period this year. Apart from the recognised "leaders," there were sales of pi any lines that are rarely dealt in, and it was significant that Commonwealth bonds also found a place on the sales sheet. Some Sharp Falls. Just what happened in the space of less than a week can be seen by the following comparisons of actual sales made before the election and after:— Before. 9 After. £ s. d. £ s. d. B.ink of N.Z. •••. '2 5 0 '2 1 0 Nationals '2 17 0 211 0 South British 2 7 (> 2 4 o N.Z. Insurance .... 2 IS n 2 1 « Wilson's Cement .. 018 3 O Hi ti Auckland (ias .... ll>3 0 l!t ."i Farmers' Trading . . 0 19 9 0 18 8 •Sale In Wellington. As already indicated, some of these lines showed a slight improvement towards the close of the week, but at time of writing, buyers are stijl hesitant, and vvhere values can be established by quotations from both buyers and sellers, they are still well btflow the rates ruling in recent months. Bank Shares Fluctuate. In the banking section, Xew Zcalands again commanded most attention, and once it became evident that holders were prepared to make concessions, buyers hid freclv. and substantial business was put through from £2 2/ to £2 M, finishing a little firmer at £2 1/3. Nationals, which are particularly sensitive to London influences, "flopped" badly. The day before the election there were buyers at 55/3, with no sellers: on the following Monday, there were sellers at 54/, and best buyers stopped at 50/6. Business was done later at 51/ and 52/. In Australian issues the only notable change was a firmness in English and Scottish, which had held their first sale in recent weeks, selling 3/ higher at £5 6/6. Insurances Weaken. Insurances suffered a severe setback. For the greater p:trt of the week they were completely neglected by buyers, and tho few silcs put through represented substantial concessions by holders. Government Stocks Decline. Political reactions were promptly reflected in Government stocks and bonds. On the Friday there were buyers for 10 different issues, and not a single seller in sight. The 3Vz per cent issue was in demand at £94. On the Monday only three issues were asked for, including a buyer of these same 3% per cents at £92 10/. Later on there was an improvement, and some business was put through at comparatively low levels. Just how the market for gilt-edged stands can be instanced in the case of the 52/55 4 per cents, which changed hands at £99 15/. Accrued interest amounts to £1 8/, and the yield to the purchaser based upon redemption at tho earlier date of maturity lis close on £4 3/ per cent per annum."

It is significant that a Bale of 4 per rent Common wealth bonds put through on Thursday showed a return of under 3% per cent per annum. Mining Quiet. A sale of Mataki at 6%d per share was the only contribution of local mining enterprises to the general turnover. Mount Morgans were steady between 11/3 and 11/2. Broken Hill Souths at 32/6 declined a shilling and North Broken Hills at 51/3 were that much dearer. Australian Business Heavy. In a solid turnover of Commonwealth industrials there were not many striking changes in values. Broken Hill Proprietary had extensive dealings within narrow limits, sales being made from 58/6 to 58/, then back to 58/4. Goldsbrough Morts reflected a stronger wool market, with business at 29/4. a rise of 1/7, and Glass shares responded to the announcement of a higher interim dividend, with sales 1/3 up at 96'. The preference issue of Imperial Chemicals sold freely from 22/4 to 22/7. Dominion Securities. As already indicated, there was no life at any point in the market for New Zealand industrials, and almost all the business put through was at the expense of holders. Even Breweries slipped with the rest, and New Zealands changed hands at 40/, a drop of 3/3, but afterwards recovered to 40/10%. For Dominions, which sold the previous week at 34'3. the best offer yesterdav was 30/. Gas shares. Wilson's Cement, Farmers' Trading, and Northern Roller Mills all sold at lower rates. An exception to the general trend was provided by Union Oils, Which sold 6d up at 21 '6. There was a revival of interest in Taranaki Oils at the close of the week, and sales were made between 13/11 and 14/3. The Outlook. As hag been frequently emphasised in these columns, it is possible for investors to overdo their cautious attitude in regard to political inflnences. Actually the most vital factor affecting the Dominion at the moment in regard to its economic welfare is the prospects for the productive season that is just commencing. Unfortunately, these are by no means rosy, compared with the three previous seasons, and the Dominion's Income will be materially curtailed as a consequence. However. New Zealand has survived lean seasons before, and will do so again. In regard to political factors, investors will do well to remember that since the election the Prime Minister has reiterated the statement made on many previous occasions that his Government has no intention of interfering with businesses that are carrying on a satisfactory sen-ice to the community. Tt is true this leaves ample scope for interference, if it is so desired, but the probabilities are that the Government will have its hands full enough in coping with worsened economic conditions without assuming fresh responsibilities at present successfully carried out by privfte cnternrises. Taking all the facts ihto consideration, it must be admitted that the current year is likely to be more difficult for traders than thev have exnerienccd in recent periods, but those which have a fairly lengthy record of successful operations. and have built up reserves should finish up the year with satisfactory results to their shareholders. If this view be cor-, rect. then the present reduced levels of manv c? our leading industrial.-, should provide a fivour»bl<? opportunity for investors to place their surplus funds.