COMMERCIAL Quarterly Review Of Sharemarket

Press, Volume C, Issue 29555, 3 July 1961, Page 16

COMMERCIAL Quarterly Review Of Sharemarket

tBl Out Uommurcun hOilotl ' The last three months have been a most active period of activity on New Zealand sharemarkets. There has also been great uncertainty about the country’s prospects, both short-term and long-term.

Prices of New Zealand shares have fallen on their home market. Prices of Australian shares have risen, both in Australia and New Zealand. They have risen rather more in Australia than in New Zealand.

Government stock yields rose to a postwar peak during the quarter, though they have eased in recent weeks. An increasing volume of business in Government and other fixed-interest securities was recorded in New Zealand. The volume of share trading has been higher, probably, than in any 'previous quarter. Australian issues have been specially active, particularly near the end of the quarter.

Prices of New Zealand ordinary shares, as measured by the Reserve Bank’s index, ■fell 5 per cent, in the last quarter. In the second quarter of last year they rose 11 per cent. The latest figure (June 22) is 14 per cent below the June 30, 1960. figure, and 17 per cent, below the record level of September of last year. Premium Declines Australian share prices rose 9 per cent, on their home ! market during the quarter: I in the same quarter of 1960 ! they rose 5 per cent, on their I way up to their September

peak. They are now 7 per cent, below the June, 1960, level.

The premium on Australian shares has fallen steadily in the last six months. From 17 per cent, or 18 per cent, before Christmas, it fell to 12 per cent by the end of March, and 8 per cent, by the end of June. Much of the rise in Australian prices has been eroded for the New Zealand shareholder by the fall in the premium.

Government stock yields rose almost without interruption from mid-February until mid-June this year. From trough to peak, the long-term yield rose i per cent., the medium-term J per cent., and the short-term i per cent. In recent weeks the yields have fallen, except for the longterm.

Official support for the giltedged market on the announcement of the current £lsm loan is probably not the only factor in the market at the moment. The firming of the market for Government stock has coincided with an accelerated downturn in the prices of New Zealand shares. Some switching of investment from equities into fixed-inter-est securities may have occurred in the last month. Clouded Outlook The downturn in the market for New Zealand shares has occurred at a time of record employment levels, record consumer spending and record overdrafts. These, however, are indicators of inflation and not of real prosperity. Of more significance are the poor balance of payments figures and unhealthy overseas reserves. These are the key indicators bow. No swift recovery in overseas reserves is likely this year. Oyerseas prices for New Zealand’s main exports are generally lower than they were 12 months ago. No further fall in reserves is expected this year, as the lengthening of the import licensing period to 18 months must reduce payments for private imports. Looking further ahead than the end of 1961, the principal uncertainty is the effect of Britain's /probable) entry into the European Economic Community, Short - term repercussions on the New Zealand economy are likely to be distinctly unfavourable, though Britain may be able to secure long-term compensations.

The Secretary of State for Commonwealth Relations (Mr Duncan Sandysi, who arrived in Wellington for official consultations this week-end, could no doubt fill in many of the gaps in the knowledge of the New Zealand businessman on this complicated subject, At the time of writing, however, it is even doubtful if Mr Sandys will hold a press conference during his fiveday visit to New Zealand. If he does meet the press, he will certainly answer circumspectly any questions which could embarrass his Government in the difficult negotiations which lie ahead. Uncertainties will beset the investor for weeks, if not months. The pattern of weak, unsettled markets which has established itself in recent weeks may persist for some time. Share Turnover Turnover for the'first six months of this year was 1,171,000 shares, rights and notes, against 1,082.000 for the first half of last year. Turnover for the June quarter this year was 659,339, compared with 544,370 in the same period last year. Turnover of Government stock, local body stock and debentures and company fixed-interest stock, rose sharply to £152,345 in the second quarter, compared with £82,162 in toe June quarter of 1960. For the six months ended June this year, however, total turnover in this category of £217.700 was 15 per cent, below last year’s £255,737 for the same period. Falls Last Week

The shares, convertible notes or debentures, or rights of 53 New Zealand companies sold last week at lower prices than at the close of the previous week. There were 16 rises in New Zealand issues, to give a ratio of ‘ills to rises of 3.3 to one. The previous week the ratio was 3.4 to one in this section, when there were fewer rises and falls. Prices were more variable last week than the previous week, but the over-all tone was no weaker. Harnish and Jordan shares made the outstanding gain, rising 3s 6d to 40s. A. and T. Burt also made a good rise, to £5 ss.

Smaller rises, by shares of particular Christchurch interest, were recorded by New Zealand Breweries, United Building, Ballins Industries, Beaths, Fletcher Holdings, Norvic Shoes, and Unit S >• divisions (after the announce-

ment of this firm's link with Paramount Homes). Shares in meat exporting, loan and agency and woollen and textile manufacturing concerns were nearly all , weaker last week. Also fea-l turing in the falls were) shares in a wide range of manufacfturing and distributing concerns. Falls of 10 per cent, or more were registered by Putaruru Timber rights, Coulls, Somerville, Wilkie rights, General Foods, Henry Berry, Reid Rubber rights, C.O.P. rights, Christchurch Press, G. H. Scales and New Zealand Woolpacks. Rights and unlisted shares account for more than their fair proportion of this list. The fall in Henry Berry shares since the announcement of a bonus share issue (equivalent to one-for-two at par) and a record year’s trading is somewhat puzzling, The shares are now 5s below their 1960 peak and 2s belcw their 1961 peak. Forest Products Forest Products shares closed 9d down at 375, on the 1 day of the preliminary profit announcement. Sir David Henry reported a 21 per cent, rise in profit, excluding the Whakatane results. These shares rose as high as 41s 9d last year, and 38s earlier this year. Long-term prospects are still good for this company, and its shares have suffered less than most from the recent general decline. The long-awaited announcement of the terms of the Forest Product'- acquisition of the Whakatane preference capital came from Sir David Henry on Friday. The offer of five Forest Products preference shares (last sold at 20s) for each four Whakatane preference shares places a valuation of 25s on the Whakatane preference share. This is the hig-.est price reached by Whakatane preference shares before the Forest Products bid last year A.B. Consolidated shares had first recorded business last week in Auckland. Wellington, and Christchurch at par—ss. Tills company was formed from the merger of Aulsebrook and Company, of Christchurch, and Bycroft. Ltd. Details of transactions on the Christchurch Stock Exchange last week were as follows: Government stock. £28.410 'compared with £14,970 last week) local body, £looo> (£800), preference, 2.300 (600); banks. 825 (1310); breweries, 4722 (6400); build-1 ing societies, nil '200); frozen meat 300 (442); gas. 307 (100); insurance, 1866 (1300); loan and agency. 1650 (3750); Umber. 300 (100); woollens.l 3816 (2600); Australian mis-1 cellaneous. 16,710 (17,207); New Zealand miscellaneous,! 14,864 (11.100); mining. 1700 (1200); unlisted, 464 (100); totals. 49.824 ( 46.409). I Yields on most Government' stock issues shortened last week. The issues traded in Christchurch showed the fol-i lowing yields to redemption: I Three per cent., 1960-62, £4! 14s 5d per cent.; 3 3 t peri cent., 1962. £4 19s per cent.;: 3 per cent.. 1960-63. £4 17s 2d per cent, and £4 17s udi per cent.; 3 per cent.. 1963-i 60, £4 18s 2d per cent.; 4vJ per cent., 1970-72. £5 2s 3d per cent Factors Board Changes (N.Z. Press Assn.—Copyright) MELBOURNE, July 1. Mr V. T. Gladstones, formerly the leading senior part-! ner of Price. Waterhouse and' Co., and Flack and Flack,' leading chartered account-' ants, has joined the board of I Factors, Ltd., finance and, industrial association of the| Stanhill group of companies, of which Mr Stanley Korman is the head. The Factors board of directors now comprises Messrs W. O. Burt (chairman), J. C. Carrodus. C. R. Daley. J. Kessler. S. Korman. L. Korman. D Korman. H. Korman. E. J. K. Thompson, I. K. Redpath and Mr Gladstones. At the last annual meeting of the company, Mr Burt gave a hint of retirement because of heavy duties, and a senior executive, John C. Carrodus, was appointed I deputy chairman. Earlier this month. Hole-; proof Industries, Ltd., a subsidiary of Factors, appointed Mr Gladstones and Sir Norman Martin to its board and Messrs L. Korman, D. Korman and I. K. Redpath withdrew from the board. Mr Gladstones is one of Melbourne's leading chartered accountants. Boral To Make Premium Issue Bitomen. and Oil Refineries (Australia), Ltd., will issue Im 5s ordinary shares at a premium of 10s a share to provide additional capital for expansion. California Texas Oil Corporation will take up its entitlement of 400.000 shares and the remaining 600.000 will be offered to other ordinary stockholders in the ratio of one to 10 held at July 12. The issue will lift paid capital to £3.060.000. including £500,000 preference.