COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume XCVIII, Issue 28921, 15 June 1959, Page 16

COMMERCIAL Review Of Week’s Stock Exchange Transactions

[By Our Commercial Editor]

Last week was the busiest of the year to date on New Zealand stock exchanges. Interest was focused on New Zealand-domiciled industrial shares in the miscellaneous, woollens, breweries and loan and agency sections. *

In Christchurch, Government stock was comparatively neglected. The Government’s £l5 million Works Loan closed on Friday, undersubscribed by more than £lm.

This must be one of the least successful Government loans since the war. The terms offered fell short of those obtainable on the open market by a wide margin, so that from that point of view the result is not surprising.

What is surprising is that the Government did not use some of its large surpluses in various departmental accounts to “fill” the loan. .It is usual procedure for some of the Government departments to invest surplus funds in new loans if subscriptions from the public are not sufficient, and no doubt some of the money raised for this loan came from this source. Alternative Explanations Did the Government over-esti-mate the amount that would be subscribed by the public, and thus fail to provide its departments with sufficient cash to take up the remainder of the £lsm? Or, if the cash resources were available, did the Government deliberately refrain from "filling’’ the loan? Taxpayers will recall uneasily the statement by the Minister of Finance (Mr Nordmeyer) on May 27 that if the loan was filled it would increase the chances of “worthwhile” tax reductions this year. At that time short-term stock was available bn the market at prices showing a yield of more than 43 per cent,, and long-term stock was yielding more than 4 7-8 per cent.—compared with the respective rates of 4J per cent, and 4J per cent, offered to investors in the new loan. Was it reasonable to expect investors to accept a lower return on their savings for up to 14 years in response to this hint? Some of these questions will be answered when Mr Nordmeyer brings down his Budget. Until then, the taxpayer can only hope that he will not be penalised for the failure of the loan. Brewery Share* Fluctuate

The sharemarket’s reaction to the increased margin of profit on beer is uncertain. Since the increase was announced nearly two weeks ago. Ballins Breweries and New Zealand Breweries have each gained 2s 9d. but New Zealand Breweries lost 6d of this gain in Friday’s business. Dominion Breweries have fallen back Is since before the price increase. Dividend expectations may account for some of these price variations. Higher margins of profit do not lead to increased profits unless turnovers are maintained, and there has apparently been some consumer resistance to the higher prices. The most beneficial move the Government could make now would be a reduction in the beer duty, while leaving the publican’s margin at its present percentage.

Details of transactions oh the Christchurch Stock Exchange last week, with figures for the previous week in parenthesis, are as follows: Government stock, £3400 (£8550); local body and company stocks and debentures, £9OO (nil): banks, 1803 (300); breweries, 2283 (100); frozen meat, 1193 (850); gas. 500 (nil); insurance, 450 (850); loan and agency, 1597 (107); shipping. 200 (nil); timber, nil (100); woollens. 4513 (700); miscellaneous (Australian). 16.073 (13,633); miscellaneous (N;Z.). 15,712 (7341); mining, 2000 (550); unlisted, 1030 (421); total, 46,359 (25,152). Gilt-edged Yields Yields to maturity on Government stock traded in Christchurch during the week were: 3 per cent. 1960-63, £4 15s 9d per cent.; 4% per cent. 1962-63, £4 17s 9d per cent.; 4% per cent. 1963-64. £4 17s lid per cent. Hays preference (18s 6d) and Forest Products preference (18s 9d) were unchanged. Woolworths New Zealand Properties preference (19s) and Union Steamship preference (20s 3d) eased. A.N.Z. Bank (475) were steady. .Bank N.S.W. Sydney register (£34 ss) | and National Bank of New Zealand I (31s 9d and 325) were firmer. A later ; sale of Bank of N.S.W., New Zealand ; register, was made at last week’s price of £33 17s 6d. Commercial Bantc of Australia were fractionally lower at 16s 7d. Bailins Breweries shares, in first business for two weeks, confirmed recent higher quotations in business at 335, c.d. Dominion Breweries (795, and New Zealand Breweries (395) sold at prices established in recent North Island business. A later sale of New Zealand Breweries was made 6d lower. N.Z. Refrigerating Recover New Zealand Refrigerating improved to sen at 33s 9d. Southland Frozen Meat were steady at 65s 6d.

Christchurch Gas changed hands at 18s 3d, ex dividend, an improvement on last business at Ids 3d, cum div. of Is 2lid.

In early business. New Zealand Insurance (74s 3d) were unchanged and South British (77s 3d) were firmer. Both eased later to sell at 73s 9d and 77s respectively. Dalgetys weakened slightly to sell at 38s Id. National Mortgage A (7s, c.d.), New Zealand Farmers’ Cooperative first preference (14s 6d) and Wright Stephenson (37s 6d) were firmer.

Lane, Walker, Rudkin (40s), and Tekau (295) were steady. Colonial Sugar, Sydney register (£4B) were steady. Ampol (18s 3d, after 18s 6d, unchanged) were weaker. B.H.P. rights opened 3d higher at 28s 3d but dropped sharply on Thursday to sell at 275. The shares continued to sell at 475, unchanged. Burns Philp\ (70s 6d, after 70s 3d, unchanged), E.Z. Industries (16s 4d and 16s 3d), British Tobacco (30s 3d, c.d.) and Clyde Industries (13s and 13s 3d), were firmer. Woolworths were again unsteady. After opening business at 15s 8d (up Id) they sold later at 15s 7d and 15s 6d. Cox Bros (5s 4d) and Reid Murray (Ils, after a sale Id lower) were unchanged. Sharp Rise in W. R. Cooke Several New Zealand industrials made .their first appearance on the local sales list for some time. They were McSkimming (24s 9d), Gillman Packaging, new (355), Simpson and Williams (565), Sharlands (52s 9d), Quill Morris (19s 9d), and W.- R. Cooke (29s and 31s). Last recorded business in W. R. Cooke was in 1958, when the shares changed hands at 27s 6d. Simpson and Williams sold last year for 595. Unchanged prices were paid for Andrews and Beaven (245), Frozen Products (5s 9d), Donaghy’s (445), Whitcombe and Tombs (27s 9d), Buntings (30s, c.d.), and Fletcher Holdings (345).

Forest Products (265, after 25s 9d unchanged), New Zealand Newspapers (44s 6d, c.d.), Whakatane (28s 6d), K.P. Drugs (80s), M.C.P. (4s 4d), William Cable (255), and National Electric (£7 2s 6d) were all sold at improved prices.

Tip Top Ice (13s 7d), M.C.P. (4s 3d and 4s 4d) and Wilsons Cement (13s 3d) sold at lower prices.

Hays provided the sharpest movement of the week among the retailers, losing Is in a sale at 21s. Beaths (325), and McKenzies (17s 3d, c.d.), made good gains. Woolworths, N.Z. (16s lOd) were unchanged.

Waihi Investments were Is lower in business at 9s 6d.

Matea Forests, which sold in Christchurch in May at 3s Bd, improved to'sell at 4s 2d. Christchurch Press had first business for some time at £l3.

RESERVE BANK RETURN Sterling Up £2.9m Last Week

Sterling and other exchange held by the Reserve Bank rose £3.om to £ 62.8 m in the week ended June 10. This may indicate a resumption of the seasonal rise in net overseas assets of the banking system which was halted on May 28, although it could be offset by a decline in assets held by the trading banks.

Advances to the State rose while State deposits fell during the week. Trading banks’ deposits rose, and the £l.lm advance to the trading banks to enable them to maintain their statutory reserves disappeared. Marketing organisations reduced their borrowing by £2m. Main Items trom tne latesi week s return, with the previous week s figures, are as follows: Liabilities

SHAREMARKET INDICES

Sugar Price Down.— The United Sugar Terminal Association’sprice of raw sugar is 26s 3d per cwt. c.i.f., compared with 26s 10id oer cwt last week, on the basis of June-July shipment.—N.Z.P.A., London, June 11.

June 10 June 3 £000 £00* Bank notes 75,668 75,112 i »• 'tin l,labilities— State 5,834 6.481 Marketing 482 316 Trading banks 64.913 63,843 Other 1,327 2,112 Assets Keserves— Gold 315 31* Sterling exchange 62,255 59,363 Other exchange .. 576 515 Investments— Overseas .. .. 13.ati9 13,069 In N Z .. 22.808 22.80* advances— State 19,442 18,740 Market orgn’s. 32,621 34,663 Other 1,050 Other Assets— Gold 5,848 5,848 Other 1,003 1,010

Sharemarket indices are:— New Y’ork.—Dow Jones: Rail. ndust Shares sold Dec 31 157.65 583.65 3,970.000 Jan 29 181 13 uyu 4u i *1 * i > w* Feb 26 .. 162 73 602 06 1.93' <>••» Mar 31 158 65 • ?< i' * i > .Hu April 30 166.82 623 75 1.510.000 May 29 167.33 643.79 2.. 90.000 June 5 163.93 629.93 2.JMM 09 June 8 161.66 621.62 2.970.O i June 9 160.46 617.62 3.490.000 June 10 162.78 627.17 1.310.000 June 11 163 25 627.49 3.120.000 London.—Financial n mes (Industrial ordinary 1935 equals 100. Goveminent 1926 equals 100 gold 1955 equals 1001? Indus, ord Gov Gold Dec 31 . 225.5 84 72 86.0 Jan 29 . 213.3 86.42 87.2 Feb 26 . 219.8 86.85 89.3 Mar 3) . 219.4 85.84 88.1 April 30 . 228 0 86.10 86.7 May 29 . 240.1 84.7a 94.2 June 5 . 235.9 85.19 94.6 June 8 . 233.3 85.19 94.0 June 9 . 232.1 85.21 93.6 June 10 . 234.3 85 19 93 7 June 11 . 235.8 85.27 93.5 Sydney.—Sx dney Stock Exchange 'July. 1936-June. 1939. equals 1001: 3anks. Retail. Indus Dec 24 142 94 333.29 222.99 Jan 30 .. 143 60 342.62 231.01 Feb 26 141 41 346.31 231.83 Mar. 31 .. 141.97 345.78 231 63 April 29 .. 146 60 343.83 241.85 May 29 152.86 350.55 250.56 June 5 I 54 35 352.03 255 95 June 8 154 41 3’0.07 1 G Tune 10 154 15 349 99 253 49 June 11 153.73 350.76 251.85