INVESTORS LOOK FORWARD.

Auckland Star, Volume LXX, Issue 304, 26 December 1939, Page 3

INVESTORS LOOK FORWARD.

PROSPECTS FOR 1940

DOMINION ENTERPRISES.

STRONG FRONT PRESENTED,

MKSFT WITH D 1 FKK'L'LTIKS

Look,list forward to the New y Par XfMV Xmlanrl mvestors arc loieed to pay more attention tnun foi merly to Dominion r-nterpMses. They rannut remit funds K.I the purpose ot' buying shares. ■"' I inu-t rinrt an outlet tor surplus funds "it ii in t iie conn tr\ . 1 lor i" vettiiient in a young cnuiitiv is necessarily ver.\ restricted, and at present New Zealand industry is l, wct »i'h dilTh ulties. In „ lf . pa , t >Cill . 1 increases in taxation added to const,.ntl> mounting «„*ts in wn|tft , Hnd ma lei la Is. augmented buidens which even o111 d si arcei\ lie boi lie except bv |'' t .T S ' • ? rt ' sr>ito of a " • • M■' I industry present*? siiong limit to the future. More sei ions, however, are the con he' 'XiT'T HtaU ' 9 | the artans ot private trader,;. These uuln irbril V i '^7 1 the of in.lnidu.il firms, but have created a t'eel- " "n«-«-tnii'ty in the minds of the i" \ '-stment community. At practicallv ' 1 annual meeting „f public i-oni-,,;",,es 11. the last lew months the iiive "iiv I" ''" ,p ' t( "' s ,1;l * deemed it protect, agam-st the harsh > ui'lll ion-i now opei a ting. Generally sl'eakinc. it may be said that the State, ,Ll r°L lnVOsto ' l «;«-pitsil and accepting no i-k. lakes more than half the net income troin the average businesw. Small Dividend Rates. . mceti , n = the Wellington V i u l t,IP chairman. Mr. Andrew Hamilton, referred to the suggesMnatPrf n l '*'/- ><>ldc.s of companies are bloated capitalists living on dividends and giving nothing ,n return. He presented an illuminating ."iirvev of shares quoted on he official list of f| lc Exchange showing th« average ot dividends paid to be as toi.owtfi: — . IV r rer ~ tent. cent. Nanking H 4 Tim her . ... 4 nsurance 10.7 Woollen ' 4Loan and agency 3.7 Breweries— nL"fn , . 1 Australian . 10.6 Investment 4... New Zealand ,1 1 frozen meat .. 5.0 Miscellaneous--Jhi* .'•• •j l ' Australian . ~.fi ionV 'If ~ Zealand 4.".' h.x t haln stores New Zealand 7.2 Another angle of the same subject was Ilea It. With at the annual meeting of the D.I.C. in Wellington by Mr. S. Mvers general manager, who pointed out that a pound spent, by the average customer tow'" 8 3CHI as fol-

s. d. Sunplirs of goods 1" 10 Salaries and wages "j r» Taxes and rates ...... iit « Trading expenses \ ' i j Shareholders' dividends . . 0 7 Leaving 3d to be retained in the business tor development. Considering the drawbacks to which re I erence has been made it is» surprising i.it most of the leading companies finished up their hnancial year with a bal■inyc on the right side of the ledger, yet tbi« was the case, although in a number of instances dividend distribution# were i I'dll reck I his comparative success was > * I'lently noted by investors and after a »<•:>- dull period in the first half of the ,there was a slight improvement in the - corid half which gathered momentum 'luring the ladt couple of month*. At the ' I '«e of the year values of a number of industrials were higher than thev were a > cjir ago, though much below the levels i "ling In December 1930 and 1037. More"ver, quite a number of issues in this class In,it formerly had a regular inquiry are now- completely neglected. For the greater pirt of the year the brewery group had the moat consistent backing, but in later month* the tdjares of woollen and coal companies as well as tho«e directly asso--1 '"A tlle timing industry had better support. Dominion Securities. Fluctuation# in leading Dominion »• curitie# are shown in the following table:— * Dec. 22, Dee. 22, Dee 22 103". 1038. 1030.' £ h. (I. K, b. d. £ s. d. Atie|c. Ons 110 OIS 0 017 0 .V.J!. Brew. 2 « « 118 (> 118 B r»«nv. Brew. IJO 0 110 3 •! 11 0 I'Mkemlro . 018 « 0 Ifi o ois fi 'I'nuplri ... 017 0 OIS 0 018 0 I.eylnnd O'Brien 018 0 oil 3 JO 12 0 Kauri ... 1 2 0 1 2 B 119 Donaghy's Rope 280 220 2 0 fi I'. Trading 1 o o 0 18 4 0 17 0 Milne, fh ee O lfi O 0 15 H 0 lli 0 W. Cement fO 17 f> n IB o 0 18 O Mosaiel . . n 15 It 0 12 B 0 12 « Bycrofrs ..226 1 18 0 1 18 0 Farm.-A lie — A pref. .13 0 110 O 10 3 B pref. . 1 2 3 . 1 O O O 18 3 N. 7,. Drug. 3 0 0 3 3 fi 3 13 0 F. Fertilizer o 10 3 o IB <; o 18 0 Hnl. Mills .1 1 0 0 17 6 0 10 0 tPar value reduced front €1 to 10/. rights to new capital issue. JTapital reduced from 20/ to 13/. Insurances Popular. I here was a steady demand for insurances throughout the year, and in the closing months values moved forward consistently. making up a good deal of the leeway that was lost at the end of last vear. Both N'eiv Zealand and South British advanced steadily, but the greatest alteration was in the case of Nationals which took a sharp upward turn in the last month of trading with final sales at IS 9. a record for recent years. In considering the position of insurance securities it should be noted that all the leading companies have a big proportion of their assets invested in Government stocks. Fluctuations in insurance shares have been an follow: — Dee. 22. Dec. 22. Dee. 22. 1037. 1038. 1030. New Zealand 3 3 O 2 11 0 3 0 0 Smith British 280220 2 80 National 0 17 0 0 15 4 0 18 9

Long View Necessary. In considering future prospects it is necessary to take a broad view and a loiw one. The immediate outlook is too full of thorny problems to warrant a cheerful fot ecast. On the one hand we have, as a community. to undertake expenditure on an unprecedented scale an our share in the Great War; nn t"he other we have to meet and solve the problems created by the Government when it allowed our sterling funds to become dissipated to a defrree that imperilled the financial reputation of the country. Serious losses and dislocation of business must be the lot of those firms whose livinsr is mainly concerned with the import trade, and unemployment will inevitably follow. These adverse factors will be reflected throughout r.he whole community. beinjr only part'ly offset by additional activity on the part of a restricted number of lor-al enterprises which succeed in obtaining the necessary raw materials.

The Brighter Side. \ ct the picture is not entirely black. New Zealand is ;i comparatively young and a remarkably favoured country. Its people have just conclu le<l a period of exceptional prospeiity. As a whole their average of wealth i.« uiiumi'ul'.v high, and they should be a.ble to withstand a right pel iod without undue hardship. The exf"M 1 e 11 re oi the slump y-'ais may be cited, fin otighout that, period r.ot one of the Ic.irl ing financial institutions of file country w.is so; toiisfy jeopardised and there were no failures in the anks of leading industrial?:. As a lc the community marched for-.vard in its national development. t. 1 -ou.'h its pr ljrress was slackened. Any deck that' may come to this forward trend «« tiie result of excep-

tional conditions may .bo looked upon as temporal > . an unpleasant experience quickly forgotten when prosperity returns As la well known, die prosperity or' this Dominion chiefly depends upon our ability to produce and export primary products to a satisfactory .market. A competent authority lias estimated that our exports tor the weason ending June 30, 1940, will leturn £66.000.000 in X ew Zealand currency | his would prove a record return tor the Dominion. I>ein.;r over £7,000.000 Hii-oaci oi last sea.son s figures. It-may be recalled that duriiwr the slump ™ c eX|^, tK . under •t 40.000.000 for each ct three veins. Exact comparisons cannot be made because greatly increased co«t« following the (government s lavish expenditure have to bo met in addition to lingo war obligations but it seems evident Muit the Minister of 1' l nance will have an cxcclk-nt opT*>rtumty to replenish stVrling funds, the shortage of which has proved slid, a disastrous handicap in the year now closing. A Great Opportunity. In this connection the chairman of the Duncdm Stock Exchange makes the following comment: — '/We cannot tail to be alarmed at the that in the financial position of the Dominion, and at the reckless public expenditure over the last few years. The party in power hits now. however, a unique opportunity to rehabilitate the "i i ! 0t tllC ( '°" ntlv the financial "orld. It has commandeered the whole of the exports of the country. These will be Paid tor in sterling in London at substantially higher prices than those of last •\ p ? r ' ' 6111,1 realised, less payment for debt services and payment for restricted imports, should leave ;i substantial margin! ot profit in the sterling exchange account. !

"With a curtailment of extravagant expenditure in the Dominion, the country may yet weather the financial depression and ruin that many have been predicting. It is a wonderful opportunity to restore ou'- financial credit and regain the good name we previously had in financial circles throughout the world." Britain Needs Our Produce. The farmers' position, which, after all, is the dominating issue in our public economy, was admirably stated by one of the leaders in the primary industries, Mr. John Deans, of Christchurch, in hia address at the annual meeting of the Canterbury Frozen Meat Company. Mr. Deans said: "We meet to-day under the shadow of war, and the future looks dark and uncertain. One thing, however, is certain, and that is the necessity for the production and shipment lo Great Britain, as fast as possible of a« much meat, wool and other produce as we can grow. "The farmer, wc know, will do his part without any urging, past experience shows us that—and the freezing companies have offered to co-operate with the Government," contained Mr. Deans. "We believe the shipping necessary to carry our produce will be available, so that if these three agencies are allowed to do their part free from hampering restrictions there should be no interruption, except perhaps from the enemy, to the free How of our badly-needed commodities to the shores ot r77e Old Country. "The recently-arranged terms under which meat and wool are being sold to

Great Britain seem fair to both sides, and should, if not neutralised by higher costs, show a reasonable return to growers and a fair remuneration to those who have the handling of their stock." Our Last Line. When all has been said that can be said of the future, one inevitably conies back to Britain's prospects in the Great War. for on this all else hinges. So far there appears to be no doubt regarding the ultimate success of the Allies, for already it has been demonstrated that Britain, far from being the decadent nation composed of looselv held constituents incapable of conibinefl action, as her enemies tried to believe, is actually as united as ever, and certainly more powerful than at any time in her amazing history. While making an incomparable war effort in all fields she is still maintaining to a remarkable degree the overseas trade tliat is a fundamental factor in her prosperity. The terrific struggle now in progress will rock the financial structure of the Empire, but it will stand the strain. Investigations made by Sir Robert Kindersley. leading statistical authoYity. revealed that on the outbreak of war Britain held foreign securities to the value of £3.692.000.000. The financial alliance recently consummated with France provides further evidence that nothing is being left to chance in ensuring Allied victory, and when the war is over this may well prove an excellent starting point for international agreements. One of the avowed objects of Great Britain in waging the present war is to secure a peace, the terms of which will include freer trading between the nations. If this can be brought about there might, easily follow an era of unprecedented prosperity, in which New Zealand, like the rest of the Dominions, would undoubtedly share.