Quarterly Review Of Sharemarket

Press, Volume C, Issue 29633, 2 October 1961, Page 16

Quarterly Review Of Sharemarket

tßv Our Commercial Cauorl With three-quarters of the year past, the sharemarket is beset with uncertainty. Will prices rise from now until the end of the year, as they did in 1959, or will they fall, as they did in 1960? Prices of New Zealand shares are now about 16 per cent, below the record level readied in early September, 1960. In the last three months the Reserve Bank index has been remarkably stable, and the September 21 figure is less than 1 per cent, below the June 29 figure, and a point or two above the September, 1959, figure.

Australian prices continue to be depressed. Industry has shown few signs of recovery in the last three months, and industrial shares are some 5 per cent, lower in price on their home market than they were three months ago. The index of Australian shares traded in New Zealand shows a drop of 7 per cent, over the same period.

London prices are also s about 7 per cent, lower than ! they were three months ago. i The weakness of Britain’s ’ external payments position i led to the raising of Bank < Rate to 7 per cent. and, i although an early reduction I is expected, it has held share prices down well below i their record May levels. 1 Wall Street prices rose i sharply to new heights in ' August but have since re- ' ceded. They are now very close to their end-June ' levels. Active Trading New Zealand sharemarkets were very active early in the quarter, but turnovers fell away in September. Recorded Christchurch business comprised £116.700 of Government and local body stock (compared with £171,245 in ‘he second quarter of 1961, and £95,950 in the third i quarter of 1960) and 571.500 shares, convertible notes and rights (659,000 and 576,000). Government stock yields have moved unevenly since the end of June. Long-dated yields are a few pence per cent, higher medium-dated about the same and shortterm yields are about 2s per cent lower than they were three months ago. Throughout the last three months it has been possible for investors to acquire longterm or medium-term stocks which will return them more than 5 per cent., and the trend has been slightly upward. Short-tenn yields, on the other hand, have fallen noticeably, possibly as a result of some switching from equities. The year 1961 is likely to be crucial in the history of most unit trusts and investment clubs in New Zealand. Many of these were founded in the last two years and most of their purchases were made when prices were higher than they are today. The quoted prices for most unit trusts show that management companies are now offering the unit holders less for their units than they paid for them. By the same token, there can be few investment clubs started in the last two years whose portfolios are showing a profit on the outlay. Unit trusts are likely to find more sales resistance than 12 or 18 months ago, . and enthusiasm for the inI vestment club movement must be on the wane. For the long-term investor, the | coming months should present favourable opportunities. Last week’s trading

showed a slight drop in share turnover from the previous week's modest total. The Australian market was unsettled by a succession of company announcements, mostly reporting lower profits or reduced dividends. The demand for overseas currencies in New Zealand is slightly higher than it was a month ago. Fourteen Australian shares traded in New Zealand on Thursday las* fetched an average premium of 10 per cent, over the Australian prices of the previous day, compared with a premium of 9f per cent, on August 31.

Sixteen overseas shares closed the week’s trading in New Zealand at lower prices, and only six improved. Among the lower prices were those paid for most of the leading Australian shares. New Zealand shares made 33 gains and 32 losses, compared with the previous week’s 29 gains and 24 losses. Among the leading issues, however, there were approximately eight losses for every five gains. Breweries, frozen meat, insurance and timber, pulp and paper were consistently weak. Woollen and textile manufacturers’ shares, after their recent strength, showed some hesitation with four rises and two falls. Cement manufacturers and retailers were also uneven. Gilt« Edged Government stock yields tended to rise. Yields to maturity on issues traded in Christchurch were as follows:—3 per cent. 1960-63, £4 18s 2d per cent and £4 18s 6d per cent; 4J per cent. 1962-63, £4 13s lOd per cent.; 3 per cent. 1962-64, £4 16s Od per cent.; 41 per cent. June 1965, £4 19s Id per cent Details of transactions on the Christchurch Stock Exchange last week are as follows: Government stock, £4975 (compared with £3745 the previous week); local body and company debentures and stock, £l9OO (£13,300); preference shares 1300 (2350); banks 75 (853); breweries 800 (2600); building societies

nil (300); frozen meat nil (1200); gas nil (350); insurahce 300 (1200); loan and agency 1460 (1715); shipping 200 (nil); wool 3900 (3050): miscellaneous (Australian) 13,777 (10.038); miscellaneous (N.Z.) 14,645 (11,991); mining 400 (200); unlisted nil (700); total 36,857 (37,447).