The Stock Exchange Year

Press, Volume LXXII, Issue 21971, 21 December 1936, Page 10

The Stock Exchange Year

Mr Semple’s friend the stock exchange gambler will look back over the year 1936 with mixed feelings, but the main ingredient will be a consciousness of having come through troublesome times not greatly damaged. He will not look very hopefully at the future, because, even yet, he is not quite certain what' the outcome of the new Government’s legislation is to be. The year has been one of fair activity on the stock exchanges, but it has at all times been one of anxiety for the investor. Those with money in New Zealand industrials have seen their equities decrease very considerably as the threat of regimentation of industry has driven support from them, though internally the country has been more prosperous than since 1929, and is actually not far behind that golden year. The most interesting feature of stock exchange trading this year has undoubtedly been the great popularity and sustained buying of Australian stocks of all classes. The demand for Commonwealth issues has been so great that a number of newcomers to the New Zealand market have made their appearance, and almost all of them have had the keenest support throughout the year. There are two reasons for this. In spite of official and semi-official contradictions, a great deal of New Zealand money, having become discouraged at the prospects of safety in the Dominion, has sought employment in Australia, as well as in England and other overseas countries. There is always a brisk trade in Australian stocks on the New Zealand exchanges, but this year the interest has been much more pronounced than usual. The second reason is that Australia this year has had something that approaches very nearly to a boom, particularly in the industrial life of the country, and naturally, shares in industrial concerns have been keenly bought by investors. So insistent has been the buying demand that many of the leading stocks are at a price which discounts greatly increased earnings in the future. On the New Zealand exchanges there has undoubtedly been gambling, but it has been gambling stimulated by desperation. Idle money in the banks is now at a level ‘higher than is healthy in the prosperous condition of the country, and idle money is a source of irritation to its owner. Those connected with the stock exchanges have this year noticed an indefinite, but nevertheless significant decrease in the habitual caution of a number of investors. Low returns on money and the uncertainty of most forms of investment in the Dominion at present, have provoked otherwise highly conservative to take risks, which, though they might be slight, would nevertheless not have been considered in

normal times. The outlook for the coming year is very obscure. The economy of the country has not for many years been so healthy. Wool is dear and meat an excellent price, and even dairy produce is giving a fair return. The rising import total shows that money within the country is plenti/ul and is’ being spent freely. But unemployment persists at a level above what would be expected, and although there has already been some indication of what it will eventually mean, business has not yet had time to discover the full effects of the new taxation upon earnings. The coming year looks as though it would be quite as puzzling, uncertain, and strenuous for investors as has the year now ending.