Review Of Week’s Stock Exchange Transactions

Press, Volume CII, Issue 30065, 25 February 1963, Page 16

Review Of Week’s Stock Exchange Transactions

(B» Our Commercial Editor I Trading on New Zealand stock exchanges last week expanded to include 151 local and. 44 overseas issues. Prices for New Zealand shares remained firm, but Australian issues eased until late in the week, when they rallied slightly. Quite a number of shares made their first appearance on the 1963. sales lists as buyers found themselves faced with higher prices for the more frequently-traded issues. Turnover on the Christchurch Stock Exchange exceeded 75,000 shares, notes and rights for the first time this year.

Leaders among the New Zealand issues again made more than two rises for every fall. The “second rankers” were also very firm, and over-all New Zealand shares made twice as many gains as losses. Woollen and textile manufacturers’ shares were, once more, the firmest section of the market.

At the Invercargill wool sale last week prices eased—sharply for some grades—on each of the two days. Prices had tended to fall at the Christchurch wool sale the previous week, ahd it may be that the boomlet which began two months ago is over. P xes are still well above last season’s, however, and a substantial increase in this season’s cheque is virtually assured.

Better Prospects

The better prospects for the timber, building and construction industries this year continue to be reflected in the prices of shares connected with these industries. Last week higher prices were paid for Consolidated Bricks, Golden Bay Cement, McSkimming Industries, Unit Subdivisions and several other stocks of this kind. Falls in this group were minor. On Thursday an exceptionally wide range of Australian securities was traded in New Zealand. For 18 of the main issues the NeW Zealand price averaged 4.2 per cent, above the Australian closing price the day before, allowing for the difference in exchange rates. The premium this year has fluctuated only between 3.8 per cent and 4.6 per cent Loans Compared An interesting commentary on the respective economic climates in Australia and New Zealand is afforded by a comparison of the Government loans- on the market in the two countries this month. The • short-term section (maturing in 1965) of the New Zealand loan offers a return of 4.375 per cent, the Australian (maturing in 1966) 4.25 per cent., the New Zealand medium term (1966-68) return is 5 per cent, the Australian (1972) 4.633 per cent.; the New Zealand long term (1977-79) return is 5.1375 per cent., the Australian (1985) 5 per cent. The Australian Government sought £6O million (as well as attempting to convert £4O million of maturing stock), ■ which, allowing for the exchange rate and Australia's greater population, is equivalent to about £l2 million on the New Zealand market. The New Zealand Government is currently seeking £lO million.

In each case the Australian Government offered a lower interest rate and a longer term than the New Zealand Government. Subscriptionsto this loan are understood to have totalled about £loom —equal to about £2om on the New Zealand market. Whether the New Zealand Government will.be so successful seems highly doubtful.

Return To Gilts

It will be recalled that until two years ago Australian Commonwealth Bond rates were consistently above New Zealand’s on the post-war period.

In the last two years public confidence in equities and in fixed interest borrowings by Australian companies has been sapped by a handful of spectacular failures and many investors —institutional and individual —have returned to gilt-edged securities.

The Standard Insurance Company’s failure last year was sufficient to put many' New Zealand investors off partly-paid or deferred liability shares, but not to switch

to gilt-edged investment. A comparison of public and private borrowing rates in the two countries, of gilt-edged and equity returns, suggests that the New Zealand investor is, at the moment, bolder (or rasher) than his opposite number in Australia.

London Market

London stock markets made a rather mixed showing last week, but the feature has been the underlying firm trend in industrial equities. Selective buying of industrials continued throughout the week and although there were many adverse movements—these often followed disappointing company statements—gains were well in the majority on the week. Prospects of a further increase in Government expenditure and hopes of fresh tax cuts, coupled with Lord Hailsham’s confidence that the Chancellor's measures will restore the economy, were the main sustaining influences in industrials.

Leading issues mostly recorded small gains while building shares and electrical equipments showed up well.

Stores failed to hold all their early gains. Engineering provided many good features but there were quite a few adverse movements here.

Steels React

Steels lost ground following Labour Party staitements on nationalisation policy. Cotton textiles and tobaccos scored some good gains.

Gilts remained in the doldrums. A.P.D., although rallying from time to time, recorded a general but modest fall on the week. Bank, insurance, hire purchase finance and ’ property shares at-

traded little attention. Dollar stocks fluctuated ‘with Wall Street and were often lower.

Gold shares gave a mixed performance. Finance houses were good with Anglo American outstanding following the increased dividend and proposed acquisition of an investment holding company. Coppers and other base metals were mixed. Oils attracted a small demand and the leaders show small .gains. Rubbers were well maintained while teas were selectively supported. Dealers in Australian stocks had a quiet week. Government stocks eased slightly where changed. Banks moved within very narrow limits. Industrials held steady in very quiet conditions. Dalgety were a good feature in pastoral shares. Golds occasionally improved but base metals were little changed, while oils trended lower.

Stock Yields

Average yields to final maturity on Government Stock rose last week. Average short term yield rose 7d to £4 15s Id, medium term 2d to £5 2s lid and longterm 3d to £5 3s 9d.

Yields to maturity on Government Stock traded in Christchurch last week: 3 per cent. 1962-63, £4 8s 3d per cent, and £4 8s 4d; 4 per cent. 1965-66, £5 0s lOd; 3J per cent. 15/9/1965, £4 11s 5d per cent.; 4 58 per cent. 196667, £5 per cent., £5 0s 2d per cent, and £4 19s 7d per cent.

Details of transactions on the Christchurch Stock Exchange last week:—Government stock, £7857 (against £7200 the week before); local body and company debentures, £B4OO (£4700); preference. 1695 (3425); banks, 1387 (3088); breweries, 4700 (1600); frozen meat, 648 (950); gas. nil (100); insurance. 1900 (2318); loan and agency, 13.032 (5109); shipping, 640 (400); timber. 200 (nil); woollens and textiles, 7000 (404 D Australian, 24.092 (12,775); New Zealand, 20,275 (17,198); mining, 350 (150): unlisted, nil (100); total, 75.856 (51,254).