BETTER YEAR

Auckland Star, Volume LXXII, Issue 304, 24 December 1941, Page 3

BETTER YEAR

STOCKS AND SHARES

SETBACK AT THE CLOSE

With the momentous events of 1940 —some catastrophic — indelibly etched on their memories, investors entered upon 1941 prepared for anything. They had become accustomed to setbacks, inured to shocks and prepared lor reverses. Some of them have had to abandon preconceived ideas about war and its effects But the progress of the war has tended to make them shoekproof. so that shai emai kets as a whole bave <ho\vn a good deal more steadiness than during the "crisis era'' before September. 1939. Like l.i-L year the present one has had its up- and downs, but over the whole period the general trend of share values h.-is been mm aril. If a graph were draw n the cur\c\ up to the be£rinninpr of this month, when the spread of the war 10 t , h , e r P iV'" H ' aßi ', ln *'DSOt the market, would folltm inurh the same direction in 1941 a> m 10-10. Just a.- last year the collapse of France caused a .-lump in values, followed by a renewal 01 confidence, especially when the Nazi air attack on Britain was foiled, so this >o'ir the setbacks in Greece and' Crete, which depressed the market, had a sequel in the German assault on Russia, which created a wave of optimism. Remarkably steady conditions followed up to the Japanese thrust against America. More Confidence Created Within the Dominion influences have been much more favourable to brokers and their clients than last vcar, when the compulsory loan and the" suspension of dealings in Australian scrip created considerable unrest. One of the most potent factors making for stability, for instance, was the Budget, which' gave companies a breathing spell in rising taxation. Another was the introduction of a voluntary, instead of a compulsorv, loan. Stable prices for farm products under contract arrangements with Britain created a steady demand for scrip in all concerns associated with farming pursuits, while many Dominion industries benefited from Government orders, the most outstanding being the woollen mills. These shares have been as popular as any on the market, and have been very firmly held throughout the year. The conversion of Government loans totalling £21.000.000 of debt domiciled in New Zealand was successfully accomplished during the year, the terms being generally regarded with satisfaction byholders. A halt was also called in raising "national development" loans. Following on the lowering of interest rates, the demand for Government loans was stimulated. and there has been a gradual appreciation of values until the present yield is from 3 per cent to 3J per cent, compared with 3} to nearly 4 per cent a year ago. Long-dated 4 per cent stocks have, of course, carried the highest premiums, as well as sound local body debentures. Sellers of these lines have not been numerous. Variations in prices over the past three years are:—

First business in the new war loan, the 3 per cent issue maturing 3951-54, was done in September at £97, showing a return, including redemption, of about 3J per cent. Prices rose very gradually, and the present market valuation is £98. The other issue, of 2i per cent, maturing in five years, had initial business at £96 5/, and last sold at this centre at £97 5/, after falling from £98 2/6. There has been a steady appreciation also in the original War Loan, the first interest payment on which is not due until October, 1943. Starting at £79 10/. the market value rose to £88 5/, and is now at about £86 15/. Australia!) Expansion With the development of Australia as the arsenal of the Pacific there has been enormous expansion in the Commonwealth's war industries, resulting in a keen demand for shares in some of the larger undertakings. However, business has been limited owing to the continuation of restrictions in dealings of overseas securities, while the advent of the Curtin and McKell Governments -was the 'prelude to severe taxation measures. These had the effect of depressing the market locally for Australian scrip towards the end of the year. Dominating all other Australian industrial enterprises In size and Importance, Broken Hifl Proprietary has had a -worrying year, and the shares touched the lowest level for many years following political discussion about profiteering and the necessity for State control. Facilities to take up rights in the new B.H.P. issue and in the new issues of Felt and Textiles and Electrolytic Zinc were afforded New Zealand holders during the year. Movements in leading Australian industrials, with comparative figures, are:—

•Capital adjustment during year Bank shares,' during most of the year, were under the influence of international events, but later domestic happenings, both here and in Australia, made their presence felt. Early in July the lowest levels were touched, but rapid progress was made following publication of' the Dominion Budget, which included provision for the removal of a long-standing grievance—the inequitable method of assessing the income tax of the banks. Bank of New Zealands responded especially to the amended legislation, after having slumped to £1 15/9, the lowest price In about 30 years, this following the cut in the dividend. Nationals of New Zealand also passed through a weak period but had staged a good recovery by July. Shares in both banks were selling at around £2 early this month before "the Pacific crisis broke. Australian banks enjoyed a steady demand on the local market until the effects of the new taxation were assimilated, when, prices moved back, and here again the entry of Japan into the war proved a further reverse. Comparative values of leading bank shares are:—

Insurances Provide Highlight With the war causing a considerable influx of revenue from many directions, exceptionally good years have been experienced by insurance companies, and the two large Auckland concerns, whose ' ramifications are world-wide, both had record premium incomes and were able to pay increased dividends and bonuses despite heavy taxation. The spectacular rise In the shares of these companies to record levels was a feature of the year's Trading. As might only be expected, the Pacific war has caused a sharp reaction, since trade and shipping in the East have been gravely affected. Prices of leading insurance shares at the close of the past three years are:—

Dominion Industrials Firm Stability has been fairly well maintained ••Wong securities in most New Zealand trading companies. Industrials and retail department stores have been the strongest sections. Breweries, timbers, toals, woollens and flour milling concerns have all enjoyed good support, especially Ifie preference issues" Some companies yave found themselves unable to mainwin their dividends, but in the majority Jf cases rates have been unchanged, even though reserves have had to. be drawn upon. Fluctuations in some leading Dominion securities are indicated in the following table:—

Interest in speculative enterprise is naturally subdued in time of war, and fPart from Australian companies dealing in base metals and the Fiji gold producers were hu been little activity in the mining niarket. All Issues have slumped- since H 1 * 5 Pacific, war started. Inquiry has been lef jf ' or shares in the larger South "land dredging claims, but these are mostly held in Australia.

1939. 1940. 1941. Stock. £ ' s d £ s d £sd 1943-46, 4 p.c. . . 100 0 0 103 10 0 101 17 6 1946-49. 4 p.c. . . 99 5 0 104 0 0 103 10 0 1952-55 . 4 p.c. . . 98 10 0 105 7 6 105 15 0 1153-57, 3>2 P.c. .. 93 10 0 101 17 6 103 2 6

1930 1940 1941 £sd £sd £sd Electro. Zinc (pf.) ..350 2 17 0 »2 7 6 Mount. Lyell 1 13 3 1 8 0 1 5 0 A.C. 2 3 6 1 19 3 2 2 O British Tobacco 2 14 0 289 200 Colonial Sugar 56 10 0 52 10 0 46 10 O Woolworths (Syd.) ... 1 4 11 0 17 3 o 15 8 B.H. *4 6 3 *2 5 3 *1 16 0 O. J. Coles 4 3 6 3 7 6 2 16 0

Dec. 22, Dec. 20, Dec. 24, 1939 1940 1941 £ 8 d £ s d £ s d Commercial o 16 2 oil o o 13 4 National N.Z 210 117 0 119 0 New South Wales . 30 10 0 30 0 0 26 0 0 •New Zealand 203 310 1 19 0 Union 8 3 0 7 2 6 6 10 0

1939 1940 1941 .. £ s d £ s d £ s d Zealand 309 320 356 South British 280* 293 2 15 0 National ., f o 18 9 0 18 3 0 19 0

1939 1940 1941 • . £sd£sd£sd guckland Gas 017 0 »0 74 069 ".Z. Breweries 1 16 6 1 11 9 1 15 0 «»n. Breweries .... 1 11 0 199 190 'armers' Trading ..0 17 0 0 19 2 120 Wilsons Cement 0 18 9 0 18 10 0 17 6 jycrofts 1 18 0 2 3 6 2 6 6 "nncrs' Fertilizer .0 18 0 120 100 woolworths (N.Z.) . 0 16 7 0 14 8 0 14 8 •Capital adjustment during year.