COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume CI, Issue 29893, 6 August 1962, Page 14

COMMERCIAL Review Of Week’s Stock Exchange Transactions

'By Out Commercial Editor)

A more active, but still unsettled market was apparent on New Zealand stock exchanges last week, Australian issues continued to weaken in the early part of the week although they recovered later. Rises and falls by New Zealand shares w’ere evenly balanced.

Many of the New Zealand leaders were unchanged and among this class of investment rises exceeded falls by more than two to one. Shares in most of the smaller, lesser-known companies were not in demand, however, and prices fell sharply when large parcels were offered.

Biggest percentage rises among New Zealand shares were made by North Auckland Farmers. Dental and Medical old and B shares, McKendrick Glass rights and Wilson and Horton. S.P.A.N.Z. and Otago Farmers made the only really sharp percentage falls. In the main, movements in prices of New Zealand shares were minor.

Highest points for the year were reached by Meat Packers, Buntings, Dunlop New Zealand, McKendrick Glass, Neill Cropper. Victoria Laundry. Wilson and Horton and Woolworths, while Wellington Gas and McKendricks again reached their 1962 peak levels.

The year’s lowest points were reached by Cyclone Industries. K.P. Drug, New Zealand Industrial Gases B. Northern Steel, R. and E. Tingey, S.P.A.N.Z., Victoria Laundry B. Christchurch Press and Winstone B.

Industrials were notably weak. Berlei B, Bing Harris A, Coull, Somerville Wilkie B, Cyclone Industries, Fletcher Holdings. K.P.N.Z. Drugs, McSkimming, Motor Specialties, McLeod Bros., Industrial Gases B, Motor Bodies, Northern Steel, Victoria Laundry B, Whitcom.be and Tombs new and Winstone B all sold at lower prices. Offsetting these losses to some extent were gains by Colonial Motors, Consolidated Metals, Buntings, Dunlop, N.Z., General Foods, J. Wat-

tie Canneries. McKendricks and McKendricks Glass, Victoria Laundry and William Cable. Retailers and other distributors were uneven, with rises and fhlls evenly balanced. Dental and Medical, rising 2s 6d to 52s 6d in first business for four months, made the best gain. Hallenstein Bros, fell Is 6d to 36s 6d. New Zealand Insurance announced its results for the year ended May 31 last week For the first time, net profit exceeded £1 million. The company is only the fourth New Zealand company to earn £1 million in a year, the others being South British Insurance, Forest Products and Tasman. The company was bound to put the best construction on the year’s trading to pacify those shareholders who would have preferred to accept Eagle Star’s “40 per cent, take-over.” The advances shown in the latest accounts, however, are no mere book entries. The loss ratio was reduced again and now stands at the respectable figure of 67.1 per cent Underwriting surplus was 4.6 per cent, higher at £506,721. Dividend requirement rose from £510,000 to £612,000 with the lift in dividend from 12J per cent, to 15 per cent. As usual, the dividend is covered by investment inc0me—£560,273 last year, £619,530 this year. The capital increase announced earlier will take place at the end of the month when a bonus issue of 58-for-100 will be made and £1 shares split into 10s units.

Andrews and Beaven announced a bonus (one-for-five) and cash (two-for-five, at 7s 6d premium) Issue during the week. The holder of 100 ordinary shares, for an outlay of £55 will thus convert his holding into 160 shares. At the indicated rate of 8 per cent, on the enlarged capital his dividend on his 160 shares will total £l2 16s, compared with £lO on the old capital. The announcement had to some extent been anticipated by the market which rose—mainlj’ in Wellington business—from 41s in May to 45s 6d in early July. Latest Wellington business, on July 25, was written at 47s 6d. C.S.R. Rights Colonial Sugar shares shed their rights to the one-for-seven issue at a 10s premium during the week. Opening Sydney business in the rights was written at 17s 3d and the closing price on Friday was 17s lOd. On this basis, the rights should fetch 15s 6d in New Zealand today, compared with Friday’s price of 15s. The shares also firmed in Australian business on Friday to close at 49s 3d, equivalent. at the current premium, to 42s lOd in New Zealand. Sales were made in New -Zealand on Friday at 42s 6d. A wider range of Australian shares was traded in New Zealand last week, at prices representing a premium of nearly 9 per cent, over the Australian prices, allowing for the exchange rate. On Thursday. 16 shares were traded at an average premium of 8.8 per cent.. compared with 11 shares at an average premium of 10.1 per cent, a week earlier. After opening the week with trading at its lowest point for a year, turnover increased substantially and prices for leading stocks showed a firmer tendency on tire Melbourne Stock Exchange last week, according to a Melbourne cable.

However, the volume of business was still well below average, with investors awaiting the outcome of this week’s Federal Budget. Rises and falls almost balanced and the week was notable for the disclosure of some excellent company results. The Commercial Bank of Australia, the Commercial Banking Company of Sydney, and the Australian Guarantee Corporation all announced record earnings for the year and many other company reports have favoured share- ■ holders. When business closed for i the week, leading stocks were fractionally higher, the cable added. Drab Trading Sydney Stock Exchanges mid-week report last week spoke of leading stocks continuing to perform poorly and second rank stocks showing less movement in “drab trading.’’ But from Thursday on the position improved and the market closed on a i firmer note. i Last week was the quietest [of the year on the London i stock market, but after a distinctly dull start a more confident tone developed and the general performance was considered fairly satisfactory, according to a London cable. Apart from a number of features often following company arnouncanents—-

movements in prices were generally small. Holiday influences restricted business and there were numerous other restraining factors. These included the crucial stage reached in the Common Market negotiations and the current, political and economic uncertainties. Industrials lost ground early to the week, but developed a better tiend later and ended the period on a very firm note.

Oil shares attracted a selective demand, and Australian Oil and Gas and Inter-state Oil shares improved. Australian mines were a shade easier to places. Gold Mines of Kalgoorlie were not affected by their results.

New York’s Dow Jones index of industrial shares rose 1.9 per cent., from 585.00 on July 27 to 596.38 at the close of last week’s trading. The London “Financial Times” index of ordinary shares showed a fractional easing to 261..9, against 263.6 at the close of the week before. while the Sydney Stock Exchange index of ordinary shares rose slightly from 290.88 to 292.46. Money Market The long-awaited official announcement of the establishment of a short-term money market was made last week. The market will “enable firms to earn interest on temporarily idle funds which might otherwise be non-interest bearing,” according to a spokesman for the A.M.P. Discount Corporation (N.Z.), Ltd., one of the three licensed operators. “Firms which might be likely to take advantage of this new facility were those having funds to meet taxation or dividend requirements, seasonal surpluses or perhaps newly-raised capital not yet fully employed. The new market would enable idle funds which would otherwise be unproductive to be put to work even for periods as short as one day. he said. An unofficial short-term market has been in existence to New Zealand for many months, so that no immediate effects will be apparent. Official recognition and licensing of operators will bring the market directly under Reserve Bank control, however, while the bank's role as "lender of last resort” will bring more flexibility to the market. Demand for Government stock last week was variable. Average short-term yield rose 5d to £4 14s 6d, while medium-term fell Id to £5 4s 4d and long-term Id to £5 4s sd. The general trend in Government stock yields has been' downward since F~bruary or March, with a steadier trend in recent months. Short-term stock yields, always more subject to fluctuations, have fallen from their February peak of £5 7s per cent, to £4 14s per cent. Further evidence of the recent Increase to fixed-interest was provided last month by the market for local body loans. New issues in Christchurch attracted record subscriptions in July, when more than £41)0.000 was invested. Yields to maturity on Government stock traded in Christchurch last week: 3 per cent., 15/4/T960-63, £4 7s lid per cent.; 4% per eent., 15/8/1962/63, £4 10s Id per cent, and £4 IQs 7d per cent.; 4% per cent., 15/7/1963-64, £4 15s lOd per cent.; 3 per cent, 15/7/1963-65, £4 10s 7d per cent.; 3 per cent, 15/5/1964-66, £4 8s 7d per cent.: and 4| per cent, 15/6/1966-67. £4 16s 8d per cent. Details of turnover on the Christchurch Stock Exchange last week, with figures for the previous week ir. parenthesis, are as follows: Government stock. £9200 (£7130); local body and company debentures and stock, £ 1400 (£2050); preference shares, 1450 (3200): banks, 200 (210); breweries, 3780 <30651; frozen meat, 800 (900); insurance, 1100 (600': loan and agency. 8775 < 1850); woollens and textiles, 3600 ( 3516); miscellaneous (Australian). 11.411 (121X15); miscellaneous (New Zealand). 24,435 (21.133); mining, 50 (nil); unlisted, 312 (1516); total. 55.913 (48,000).

Armstrong And Springhall

Armstrong and Springhall. Ltd.. Wellington. whollyowned trading subsidiary of Armstrong and Sprir.ghall (Holdings'*. Ltd., made net profit of £31.020—a drop of nearly 50 per cent... on the previous year’s £O2 019 >—in the year to March 31. 1962. Result is reached after £17.484 for depreciation (against £16.089 ‘he year before) and £32,021 for taxation (£642591. Recommended 12 per cent dividend on £240.000 paidup capital takes £28.300. the same as last year This dividend goes to the parent company. This year there is no tran«fer to general reserve Last year £30.000 was transferred. Carry-forward is £44,616 against £ 37.396 last year. Directors say results of the company’s operations for the last year wc-e not as good as had been the case in previous years. Extension of the 1961 import licensing year to 16 months and heavier tradin' g expenses had been reflected in the company'* result they M -