Review Of Week’s Stock Exchange Transactions

Press, Volume XCIX, Issue 29367, 21 November 1960, Page 20

Review Of Week’s Stock Exchange Transactions

[By Our Commercial Editor} The weakness of the sharemarket last week was probably more pronounced than at any time since the decline set in two months ago. Prices of both Australian and New Zealand shares tumbled and six falls were recorded for every rise in Christchurch trading. On Thursday, however, some of the Australian shares recovered some of their losses earlier in the week, and this steadier tone held on Friday.

Australian share prices, as reflected in the Sydney Stock Exchange index, are now about 14 'per cent, below their 1960 peak, reached in September. They are still some 7 per cent, above their [1960 low, reached earlier in the year. New Zealand prices, according to the Reserve Bank’s index of ordinary shares, are 7 per cent, or 8 per cent, below their peak, and 17 per cent, above their lowest point. The decline in Australian shares has therefore been about twice as severe as the decline in New Zealand shares. This is scarcely surprising, as the competition from imports, and the corrective measures recently applied, are considerably greater in Australia than in New Zealand. In spite of the rally in Australian prices towards the end of last week, most observers expect the Australian market to ease further before it stabilises. Fallen Too Far? What is surprising about the present market is that New Zealand prices have fallen as much as they have done. Although New Zealand’s overseas reserves have been falling rapidly in the last three months, there has been no flood of imports to compete with the products of local factories. Mild restraints have been imposed in the form of credit restrictions, and there is every likelihood of further measures being imposed to reduce spending in the next few months. When this much has been said, there remains a suspicion that the fall in New Zealand share prices is mainly due to a sympathetic reaction to the drop in tile Australian market. There are several ways in which a drop in Australian share prices affects prices of New Zealand shares. Investors accustomed to seek higher yields will be attracted to Australian shares when their prices fall, as the yields are thereby increased. They may even sell New Zealand shares to raise the money for these purchases. In such cases a drop in Australian prices would tend to reduce buying of New Zealand shares and increase the selling pressure on them. There are some indications that this has been happening in the last two months. It is also likely that, in anticipation of further price falls in Australia. New Zealand investors are “holding back” until they think the market has stabilised. Aluminium Industry Perhaps the fourth quarter of 1960 will be remembered by investors in five years’ time as “the dawn of the aluminium era,” rather than as “the time of the sharemarket shakeout.” The announcement by the Prime Minister (Mr Nash) on Saturday that Consolidated Zinc plans to go ahead with its aluminium project in Southland is big news indeed for investors. The full implications of the scheme will not become apparent until further details are known. <Mr Nash has not yet revealed how the finance is to be raised, or how the equity capital will be distributed.) This much can be stated even at this stage, however: an aluminium industry will strengthen the New Zealand economy more than any other project launched in this country for many years. In terms of capital required, employment and export earnings, the Southland project is a major scheme by world standards. It may serve as a nucleus for an industrial complex in Southland. At the very least, it will help to check the “drift to the north” so apparent since the war. This migration of population and resources, besides stirring local jealousies, has aroused concern at national level. A more balanced view of national development should prevail in future. Details of transactions on the Christchurch Stock Exchange last week, with figures for the previous week in parenthesis, are as follows:—Government stock £11.030 (£24.950>: local body and company debentures and stock, £5OO (nil); preference shares 1471 (nil); banks 120 (35); breweries 4950 (860); building societies nil (650): frozen meat 65 (100); gas 865 (2001; insurance 50 (nil); loan and agency 1000 2492); woollens 1020 (600); miscellaneous (Australian) 10.412 13795): miscellaneous (N.Z.) 12.320 (9440); mining 400 (50); unlisted 4027 (3300); total 36.700 (21,522). Gilts Finn Gilt-edged stock was fairly active and yields tended to fall. Yields to maturity on stock traded in Christchurch were as follows; 41 per cent.. July, 1961. £4 2s 5d per cent.; 3 per cent.. 1959-61. £4 6s 3d per cent, £4 7s 7d per cent.; 3 per cent, 1960-63, £4 5s 5d per cent.; 3 per cent., 1961-63. £4 5s Od per cent.. £4 5s 2d per cent.: 3 per cent, 1964-66. £4 4s 9d: 4 5 s per cent., 1966-67, £4 15s 4d per cent. Demand for preference shares was well sustained. Aulsebrooks were firmer at 19s 6d. McSkimmings at 19s 6d and Williamson. Jeffery at 19s 3d. Only Lane. Walker, Rudkin, at 19s, were easier. Canterbury Frozen Meat <£s 15s) were steady. Bruce Woollen’s 7 per cent, preference shares (20s 6d) and Holeproof (18s 3d) reappeared on the sales list.

Of interest to holders of preference shares was the move announced last week by the Cyclone Fence and Gate Company, to increase rates of dividend on preference shares. Cyclone’s directors are not the first to acknowledge that preference shareholders have ‘‘had the dirty end of the stick” in these days of inflation; Harley Chambers and Kaiapoi Woollen are two other Christchurch companies which have been prompted by the same considerations.

Commercial Bank of Australia were steady at 15s. but Bank of N.S.W. eased further to £32. The breweries were consistently weak. Ballins lost 4d to 12s lid. Dominion 3s to 86s and New Zealand 5d to 12s Bd. Canterbury Frozen Meat lost a further 10s to sell at £27. Christchurch Gas. fully paid, were 3d down at 18s 3d, but the contributing shares sold unaltered at 12s 9d. South British Insurance, the only share traded locally in this section, were 2s 6d down at 51s. Wright, Stephenson fell sharply to 51s 9d and 52s 3d, after business the previous week at 555. Kaiapoi showed the sharpest fall among the woollens, falling 2s to 9s. Lane, Walker, Rudkin were 6d down at 16s. The rights market was quiet last week. Fletchers rights were 6d down at 8s 3d. Hume Industries rights fell 6d to 28s. Two new issues—L.N.C. Industries rights and Fabers Furnishing rights—had first business, at 2s 6d and 2s respectively. Australian Industrials Not one of the Australian shares traded in Christchurch last week closed at a higher price than in the previous week, though several recovered on Thursday and Friday. Ampol (14s), B.H.P. (69s 9d), Carapark (7s 9d), Colonial Sugar (£65) and Olympic Industries (7s 6d) were weaker. H. C. Sleigh were unchanged at 14s 6d. The retailers were also very weak. Cox Bros, were 5d down at 7s lOd and bigger losses were shown by Coles (latest business at 12s 9d). Reid Murray (8s 9d). Waltons (8s 6d) and Wool worths (13s). The mining stocks. Mt. Isa and Mt. Lyell, were again weaker. Mt. Lyell closed 4d down at 5s 6d. Mt. Isa sold 5s 9d down at 50s on Thursday, but buyers on Friay offered 545. Three Christchurch firms’ shares made modest gains among the New Zealand industrials. They were Farrier-Waimak (up to 3d at 19s 3d), Industrial Gases (up to 5s 6d in first business for some months) at 60s, and Christchurch Press (up ss) at 655. Other industrials were unchanged or weaker in local business. Burnetts Holdings were lOd down at 6s 9d. Fletcher Holdings (39s 6d), General Foods (16s 2d), J. Wattie Canneries (41s and 41s 6d>. Forest Products (37s 3d), N.Z. Newspapers (68s 6d), Transport (Nelson) <9s 3d) and Whitcombe and Tombs (60s! were all weaker. A. S. Paterson. Ashby Bergh, Golden Bay Cement, Griffins, K.D.V., K.P. Drugs and Whakatane Board Mills closed at the previous week’s prices. Retailers were also weak.' Charles Begg, new, eased to sell at £5 Is 6d. Hay’s shares (395) and notes (325), L, D. Nathan (30s), McKenzies (17s 9d), Woolworths (N.Z.) (16s 8d) and Bea th's Is paid. 19s on deposit (31s) were all cheaper.