RISING MARKET

Auckland Star, Volume LXXIV, Issue 302, 21 December 1943, Page 2

RISING MARKET

SHARES DURING 1943 WIDESPREAD CONFIDENCE Investors will look back on 1943 as the fa-st in many years when stocks and shares, completely free from fluctuations, developed a steady upward trend wnic'n continued unbroken up to the close of the market. Generally, share vaiues have closely followed the fortunes of the United Nations, and there has been little in the war news during the year drawing to a close to disturb the feeling of rising confidence in the financial and commercial world. Record bank deposits and cash balances, associated with a contraction in the avenues for investment, have been reflected in a spirited demand for all types of securities, including many which had been neglected for long periods. Apart from the growing popularity of shares for longterm holding, extensive subscription to war loans has resulted in a large body of new investors becoming "stock-minded." A year ago the chairman of the Auckland Stock Exchange found cause to express concern at the one-sided support accorded war loans; this year he wab able to refer to the splendid response to the Third . Liberty Loan of £35,000,000 — the largest internal flotation in New Zealand's history. In view of the fall in interest rates and current share yields to the vicinity of 3 per cent, holders of trust funds have found the Liberty Loan stock at a discount good buying, and there has been intense activity on the Stock Exchange in these issues, especially in the latter months of the year. Government Stock, which gave a return to the purchaser of roughly 4J per cent in 1939, now yields from 3 1-8 to 3i per cent on the open market. Investors' Restraint

Speculative influences have gained little foothold in operations on the New Zealand stock, exchanges, and the restraint and conservatism of the average investor have no doubt contributed in large measure to the comparative freedom from control enjoyed by the market here. "Bulls, bears, panics and booms," familiar enough on Wall Street, have no counterpart in the Dominion, and it was this stability, more than anything else, which enabled exchange dealings to be carried on smoothly and with confidence during the lowvalue period of 1941-42. On the other hand, the artificial restrictions placed on share trading in the Commonwealth, though administered more liberally in the year under review, have proved to have been largely unnecessary- With each revision of Hie fixed ceiling prices on the Australian exchanges, shares became jammed and the normal flow of business was checked to no purpose. A return taken out covering current share prices compared with those a year ago -shows that six leading Australian industrials are up 10 per cent, ten Auckland industrials are higher by 29 per cent, four New Zealand insurance companies are up 13 per cet, four banks are up 9 per cent, two Auckland breweries have risen 19 per cent, and six retail store shares actively dealt in are up 15 per cent. Net profits of most industrials have been steady to slightly higher, and dividends have generally bee.n maintained, A major handicap affecting many trading companies, particularly those associated with war orders, is inability, on account of heavy taxation, to set aside adequate reserves for p.ant renewal and transition to peacetime industry. New manufacturing concerns, not blessed with large reserves, also face this .difficulty.

Features of .Trading Among the features of the year have been the- wide popularity of farmer finance and woollen company scrip, the striking gams -in insurance to record high prices, and the substantial improvement in retail stores and breweries. At times during the year sellers apparently decided to take their profit, whicn in many cases was very remunerative, and there were periods of marked activity equalling those in pre-war years, but offerings were quickly absorbed and the market reverted to average turnovers or less. Similar animation followed the liquidation of any large estates. Two unusual features are. worthy of comment: One was the complete indifference of the market to the general election campaign or its result and the other was the continued activity of Government stock, including war loans, during the filling of the Third Liberty Loan. Beth might be explained by the eagerness of buyers and the shortage of scrip, which overcame all other considerations. ' „ ~ _, With the shadow of war receding from the South Pacific, fresh interest was taken in stocks which fell heavily when Japan first struck. Island trading concerns and New Guinea gold mines benefited especially Other mining shares have enjoyed steady appreciation, but taxation and gold duty have been retarding factors. „ , , .. . It is somewhat paradoxical that, during recent weeks, there has been selling in London and New York on views that peace is comparatively near and that some companies will not prosper as well after the cessation of hostilities as they did during the war. "The danger of peace,' as it has been quaintly termed, should not be feared by the majority of New Zealand companies, whose profits and dividends have been severely restricted by wartime taxation, and whose directors look forward to peace for healthy reconstruction and development.