COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume CI, Issue 29799, 16 April 1962, Page 18

COMMERCIAL Review Of Week’s Stock Exchange Transactions

(By Our Commercial Editor) Prices for New Zealand shares continued to rise last week but less strongly than in the previous week and with a tendency to level off towards the end of the week. Starting with eleven rises to four falls on Monday the market was again firm on Tuesday, but over the last three days rises barely exceeded falls. Over the whole week there were 47 rises and 27 falls, a ratio of 1.7 to one compared with 1.8 to one the previous week.

Turnovers were down on the previous week. Christchurch sales of shares, rights and convertible notes showed a 14 per cent, fall. N.Z. retailers and industrials showed the biggest drop and turnover of Australian shares showed a further decline. Overseasdomiciled issues normally account for up to half the Christchurch turnover, but last week amounted to barely a quarter of the total.

The British Budget had little effect on the over-all level of share prices in the United Kingdom. The “Financial Times” index of industrial ordinary shares closed at 298. S last week, a fall of slightly less than 1 per cent, over the week. The modified form of capital gains tax introduced by Mr Selwyn Lloyd contains several novel features and the full impact of these on the sharemarket may not be felt for some time.

Capital losses may be carried forward to offset future “short-term” gains—"shortterm” being defined as six months. It may, in some circumstances, pay an investor to sell a stock at a loss so as to minimise his tax on profits he hopes to make from other sales in the near future. Australia and New Zealand have not. as yet, a capital gains tax. The operation of the United Kingdom tax will, no doubt, be closely Scrutinised in Canberra and Wellington. Pre-1957 Profits Unless the period of grace is extended in this year’s Budget, the “bonus issue from pre-1957 profits" may become a more regular feature of New Zealand company news in the next 11 months. As the law now stands, companies have until March 31 of next year to make bonus issues from this source which will not be taxable in the hands of shareholders. Many of the older companies still have substantial reserves built up before 1957. Tattersfield, Ltd., the Auckland mattress and carpet manufacturer, announced last week a two-for-3 bonus issue from pre-1957 profits. The issue is the first since November, 1957, when capital was raised from £55,000 to £165.000 by a two-for-1 bonus issue. The £1 shares are seldom traded. Last sold on October 15, at 63s 6d, they were wanted in Auckland on Friday at 67s 6d. Australian share prices showed a barely perceptible fall last week, when the Sydney Stock Exchange’s index of ordinary shares fell a fraction of one per cent. Retailers rose slightly and industrials fell. Trading on the Melbourne Stock Exchange increased last week as buyers operated more freely, according to a cablegram. The stock exchange reported that rises outnumbered falls but the movements were mostly of minor significance. “Brewery and banking shares were in demand, the breweries in the belief that favourable capital moves may be pending, and the banks as a result of new measures which could lift profits.

“Market leaders made little headway and when business closed Colonial Sugar, Commonwealth Industrial Gases, E.Z. Industries and

1.C.1.A.N.Z. had all eased.” Wbolworths announced a one-for-5 par issue to raise £2.6m. The Commercial Bank of Australia is to launch a savings bank. Email’s dividend is maintained in spite of a 27 per cent, fall in profit and B.H.P.’s £l2m debenture issue was heavily over-sub-scribed.

N.Z. Issues Brewery shares made three rises and two falls. All three insurance issues weakened, loan and agency shares were uneven, the main feature in this section being the firm market for N.Z. Farmers’ Cooperative shares. Matakana Milling, which announced an increase from 8 per cent, to 10 per cent, in dividend, rose 6d to 17s 6d. Alex Harvey, last sold at 33s 6d. had buyers at 34s 6d after the announcement of the one-for-4 bonus issue. Since the company took over J. Gadsden (N.Z.) last year. Alex Harvey has expanded into lines other than canister and sheetmetal making, its original products. New products are mainly in different types of packaging. In the year) ended March 31, 1961, earning rate was 19.3 per cent, on capital. The proposal to revive Booth, Macdonald, after six years in receivership, has aroused new hope for the company's creditors and shareholders. The last accounts presented before the receiver was appointed in January, 1956, were for the year ended June, 1955. These showed paid capital at £217,588, in 10s shares, bank overdraft at £549,433, and other creditors at £109.557 Fixed assets were valued at £267,994, stocks at £509.404, and book debts at £94,643. Result far that year was a loss of £45.073. By July 9, 1957, the receiver appointed by the bank had realised £277,000 from the sale of assets. The chairman (Mr A. M. Satterthwaite) announced last week that the bank had agreed to take over the "balance in the receiver’s account,” which presumably means that the bank is standing down in favour of unsecured creditors. Even so. it may be years before the remaining creditors are all paid off. Not until then can the shareholders hope for a resumption of dividends. It is understood that the company plans to resume trading as an importer and distributor of machinery. Reestablishment of the company’s eligibility for import licences will be the next major task for the company. The proposals by the directors of Maling and Company to their preference shareholders merit ready acceptance. By offering to redeem, at par, half the preference shares now issued and to lift the interest rate on the other half, the company has virtually lifted the market value of all the preference shares about 3s 6d. The

gesture should be well rewarded in goodwill. Gilts Firm Government stock yields continued to fall last week Yields on short-term stock reached a peak in late February, and yields on mediumterm and long-term stock reached their peaks in March. The general trend since income tax payments were made in March has been for yields to fall. Yields to maturity on Government stock traded in Christchurch last week were as follows:—4j p.c. 1962-63. £99 14s 4d p.c.; 4 3-8 p.c. 15/11/1963, £5 0s 8d p.c. and £5 0s lOd p.c.; 4? p.c. 1963-64. £5 3s 7d p.c.; 4; p.c. 15/6/1965, £5 4s 7d p.c.; 4 5-8 p.c. 1965-66, £5 7s lid p.c., and 3i p.c. 15/9/74, £5 7s 7d p.c.

Details of transactions on the Christchurch Stock Exchange last week are as follows: Government stock £4985 (against £3670 the week before); local body and company debentures, £4750 (£3350); preference shares, 6341 (902); banks. 2323 (1136); breweries, 2926 ( 3400); frozen meat, 1400 <3100); gas, nil (200) insurance, 400 (3050); loan and agency, 1580 (1150); woollens and textiles. 1500 (7510); miscellaneous Australian. 8862 (10.300); miscellaneous New Zealand, 14631 (20,177); mining, nil (250); unlisted, 4290 ( 487); total, 44,253 ( 51.662).