THE WEEK REVIEWED.

Auckland Star, Volume LXX, Issue 189, 12 August 1939, Page 4

THE WEEK REVIEWED.

A DULL PERIOD. BUSINESS AT LOW EBB. MANY DEPRESSING FACTORS, Business on 'Change continues at an unusually low level and recorded .♦ales over the past fortnight have been considerably below the average. During the week which ended last night matters were particularly dull, on occasion approaching stagnation, but showing some improvement as the week ended.

As in recent months the disturbing factors are numerous and cover a wide area. The international arena, while temporarily free from the acute crises which persisted until a few months back, is still in an extremely unsettled condition. Kiirope may still be likened to a seething cauldron that is liable to boil over at any moment. Apart from war scares, the economic conflict which is being desperately fought between the world's leading countries, coupled with the wasteful expenditure of untold millions on armaments, prohibits a return tn world prosperity which is the essential backing to a sound investment luai ket.

Judged from the daily turnover on tlio Now York Stock Exchange, which is cabled regularly, the week in Wail Str?ot was comparatively dull. Business in London is further hampered l>y the fact that this is the Whitsuntide holiday season. The only consoling feature in the British markets has been the comparative stability of values since Munich, maximum deviations being 10 above and 7Vi below in the Financial Xews index. Coming nearer home, it is apparent that Australian exchanges not only lack the support that could be expected from active world markets, but are affected by local issues of unusual magnitude. The Commonwealth is getting ready for its first £100.000,000 Budget, including defence expenditure of £32,000.000. and investors are naturally concerned to know whence these hugs sums are to be found. Drastic increases in taxation, both indirect and direct, are expected. Politics and Shares. In this Dominion the market is still depressed by political considerations. When the latest Budget was announced it seemed that investors were not greatly disturbed by its contents, but the semistagnation which occurred later suggested that the full implications of the Government's huge commitments had not at first been realised. Moreover, the discussions in Parliament are quite sufficient to shake the confidence of the most optimistic investor. A Welcome Assurance.

However, in one respect the week in Parliament will jirobably prove, from the investment point of view, one of the most notable for many years. Replying to criticism from the Opposition, criticism that had been provoked by remarks from Mr •!. A. Fee. which seemed to iniplv the possibility of default in the country's externa! debts, the acting-Prime Minister, the Hon. P. Fraser, delivered a statesmanlike speech in which he made it abundantly clear that the Government intended, 110 matter what sacrifices were involved, to pay the country's debts and protect the good name of the Dominion.

The assurance was timely and was admirably expressed. In the past there has been a lurking suspicion among many investors that the Government, in dealing with its financial problems, which have been growing in intensity, might, in desperation, resort to confiscation in some form or another. The statement made by Mr. Fraser was sufficiently definite to allay all such fears and should be welcomed by every Stock Fxchange in the country as sounding the death knell of the repudiation bogy which has in the pilot been used with damaging effects on the investment market. It has been computed that capital to the extent of elose on £20.000,000 has left New Zealand in recent years. Once it is realised that capital is as safe in this country as in any other and that opportunities for profitable investment are available that capital will .-0011 return to take its .part in the development of the Dominion's industries.

Government Stocks Wanted. In the limited business put through a chief feature was tlie marked preference for Government stocks. There were inquiries at every call for practically all listed lines, but sellers were reluctant to part with their holdings and although buyers raised their offers, only three sales in this claims were recorded. Tlie demand for Auckland Harbour Board and City Council loans was almost as keen, but no business resulted. The popularity of the Harbour Board scrip was again exemplified by the announcement that the recent, issue of £200.000 worth of debentures had been'fully subscribed within approximately two months from the opening date for applications. Amalgamated Brick debentures have had a strong demand in recent weeks and the Auckland issue touched its highest point for a considerable period with business at £101 10'.

Banks and Insurances. A feature of the week from the viewpoint of banking shares was the appearance of tlie balance-sheets of the Commercial Banking Company of Sydney and the Commercial Bank of Australia. Both were made out to .lunc 30 and indicated satisfactory conditions tip to that date. Commercials of Sydney increased its profits from £306.000 to £377.000 and are to pay the osual 7 per cent dividend. With a capital of £4.730.000. the company has reserves exceeding £4,300,000. Commercials of Australia, whose 10/ shares are freely dealt with in this country, show a slight increase in profit at £262,010, and pays a dividend unchanged at approximately 7.08 per cent. Paid capital stands at £4.117.3.~0 and reserves exceed £2.000.000. Despite those ev> dences of banking prosperity there was only a moderate demand for Australian shares and apart from sales of Commercials at 16 '8 and 10'7 the only other transaction was in S. and A. which at £4 16 6 showed a drop of 3/6. New Zeilands were steady at about 30/3. and Nationals of New Zealand were in regular request at last week's advanced level of 46/6, with occasional Sellers asking 47/3. There was a steady demand in the insurance section, but South British eased slightly with business at 43/. while New Zealands showed some improvement following the annual meeting with sales ex dividend at i)l/6 and i>2,'. Australian Issues.

For reasons already given the demand for Commonwealth industrials was not particularly keen and business was of comparatively small dimensions. 8.11.P.'s (Broken Hill Proprietary) sold 9d cheaper at 68/. while a slight improvement was recorded in "Mount Tnells. Electrolytic Zincs and A.C.l.'s (Australian Consolidated Industries). Woolworths were active with business up to 24/4 and <!. .T. Coles slipped back 16 with a sale at 78 '0. Dominion Breweries Advance.

In moderate business transacted in New Zealand industrials the most noticeable change in values occurred in tlie ordinary shares of Dominion Breweries, which sold a shilling higher at 34.0 with unsatisfied buyers still in at that price. There was a persistent demand for coal shares and sales of Renowns and of Westport Stockton were made at higher rates. Ga.s shares were weak and after the interim dividend had been paid sales were made at IG/. with more available at that figure. Wilsons Cements were steady at 17'3. but Consolidated Bricks and Farmers' Trading were slightly easier.. Recent Reports Satisfactory.

Annual reports which bccamc available during the week appear to indicate generally satisfactory business conditions over the last financial year. From Dunedia the returns from the old-

established Standard Insurance Company sno'.vcd an increase in income fro*n ii_lo.J/0 to £222,707 and the usual linal dividend, making ]'2'i per cent for the year. proposed. In this province the I aupo-J otara Timber Company. with headquarters at Putaruru, shows a slight improvement over the previous year with net profits increased from £8285 to *843... I' l this case, after preference shareholders receive 5 3-5 per cent, ordinary shareholders, who had no dividend last \ ear, arc to receive 2 per cent The accounts of YVairakci. Limited, show that the marked improvement in that company ft affairs evident in the last tew years continues. Both gross and net profits are higher and the usual 7Vi percent dividend is to be paid.

Renown Collieries Progress. Another enterprise which lias shown steady progress in recent years is Renown I. ollienes. whose accounts reflect a substantial increase in turnover with profits also at a higher level. In 1934 this company wrote down jis ordinary shares fi 0111 £1 to 12/ and arrears of cumulative preierence shares were written off in order to liquidate accumulated losses. At the_ same time the dividend payable on pretj'rence shares was reduced from 10 to 1 per cent. This readjustment, followed up by efficient management, started the company 011 a fresh and successful stage Its financial position lias been steadily strengthened year by year and besides paying regularly the dividends due on preference share* sufficient has been a\ailable to make reasonable distributions to holders of ordinarv shares The present rate, unchanged, is KM per" share! Jhe "clean ' condition of the balancesheet is indicated by the fact that on balancing date there were no outsid- liabilities apart from debentures. The market has evidently noted the sustained 1 nprovemcnt in the company's affairs and the ordinary scrip sold during the week at 10/9, compared with Sij last May.

LATEST SALES. Sales since last review have been as follows: — Banks.- Xew Zealand. CI 19/3 (21. £1 Jfl/4 I '-. £1 19 3 (2) : Commercial, 10/8, lli/i ; K., S, ami A.. C-t 10 0. Insurances.—New Zealand. £2 12/(i Cox £03. £ " 11/(i ( - K x - South British. Government, etc.—Stock. 15/1 '53-57, 3'2 per cent. £S9 5/: Stpteiuber. 39-43,' .T-i per cent. £99 10.' (2); Amalgamated Brick/Akd.l. £101 10/. Mining.—Mai tha. 9 0 (3i: Xgahere. £1 2 ii: Waihi 111 vestment, 0, 3; Kmperor, 11 3: Mount Kasi. 3/. Australian. etc.--A.C'.I.. £1 19/0; Broken Hill Proprietary. £.'! S 0. £3 8 3. £3 8 ; Dunlop Perdriau, £1 0 10: Ficctrolytie Zinc. £2 12/9. jiref.. £2 17/9: d. ,T. Coles, £3 18 '9: Kauri Timber, £1 2/9; Morts Dock. 115.3; Mount Fvcll. £1 ? rara 11 aki Oil Development. 2 (31. -' 1: I aranaki Oillichls. ti 4; Woolworths (Sydney). L' I 4/1. £1 4 3, £1 4 1 (41: Woolivorths Holdings. 14 9.

Dominion.--Auckland C.is ("ex. div.l. If) : Kycroft. £ 1 l.Vfi (2). ill)/ paid). £1 s': Consolidated Brick. 8 ti. 8/5 (2'i : Dominion Investment. 10 li (21: Dominion Breweries. £1 14 9 f2l : Farmers" Trading. 18'2 18 1 ; "Milne and Choyce, B prof.. 7 per cent. £ 1 2'fi; X.Z. Drug. £.'? (2i ; N.Z. Newspapers, £1 12 9 (2): Keid Bubber fi.";/ paid). £1 4/; Benown Coal. Hi' 9: Traders' Finance. I.'!/: "Westport Stockton. 4-': West nor I. £1 09: Woolworths fX.Z.I. 17 10. 17 9: Wilsons Cement. 17:) (4): Citizens' Permanent Building. 10'.

TREND OF MARKET. The following table inilimtc-s tlie fluctuations in the values of various i seeui ities: — Jan. 27. August 4. AususMl. inss. 10.':!). 1939. s. (1. C s. (I. <; P. (1. A'nsin .. 7, I.' o o ."i 0 0 o Commercial t> Ir, ii ii 11; " n n; ~ K.. S. ami A. ."> 2 ii -l v.i ii I lii i; Nat.. N.Z. 2 Ii :: 2 7 I) 2 7 II Nil!.. Aust. <i Ir, II ii 17 (i ii 17 <; N.S.W. .. "II 12 ii fill 1(1 II oil H) (I N. Zealand 1 IS ii 1 19 1 1!( -I Ulliun .. S 12 <i 8 I) O SOU MISCEU,ANKOL'S. C s. <1. t f>. (1. € s. (I. N.Z. Insur. 2 14 !i 2 12 Ii *•_> I'J (I s. I'.ritisli 2 ."> j :: n 2 ;; ii tiuld.s M. 1 9 u 1 7 !i 17 !i lirit. Toll. -J s ii 2 11 i; -j ii r, Hroken H. 2 Hi 9 :: x o :s so Klec. Zinc - 7i r, "J I Ii 2 12 !l (prof.) 2 !l ii 2 17 (i 2 17 !l Aust. Con. 10 0 1 ill n 1 ]!i (; Ml. I.yell 1 <i II i s (i i s :i Col. Suitiir 47 i) 4:i o o 4!l ."> <i Aur-k. Gas ii ll> ii ii ii; 'o ji; (i Wilsons C. () Hi (I II 17 4 f) 17 -! N.Z. I? row. 2 10 1 17 0 1 17 ii Jfciin. Hri'w. i 12 n i i:i i ir, n Farmers' 'I'd. 0 IS 4 0 IS .'{ 0 IS 1 OOVKHNMKNT KTO< K. i s. d. £ s. il. £ r.. ,1 10r.2. . fir> o 0 fn; ii ii on r, <i ir>4.'S-4i; .. !l!l 10 II !i!l 2 !i!i 10 t) 1 ")7 .. in io o s;i o ii so o o IK4S .... —- II!) 12 0 99 12 C *Kx dividend.