Review Of Week’s Stock Exchange Transactions

Press, Volume CII, Issue 30106, 15 April 1963, Page 14

Review Of Week’s Stock Exchange Transactions

(By Our Commercial Editor)

Everyone, it seemed last week, wanted scrip for Easter. When everyone wants something at the same time, up goes the price—which is what happened on the sharemarket. The shopping spree rose to a crescendo on Thursday, when most of the vendors appeared to have closed down and the remainder were in two minds whether to sell or to hold. In a trading session without recent precedent, 29 New Zealand shares issues sold unchanged and 22 fetched higher prices: not one sold at a lower price.

Over the whole week, 53 of the 114 New Zealand issues traded were firmer and only 10 were sold at lower prices than in most recent businesses up to the end of the previous week. The ratio of more than five rises to every fall is the highest for many months.

Australian issues, less spectacularly, were also firm. With nearly two rises for every fall, last week was one of the best this vear for overseas issues on the New Zealand market.

Leading issues headed the list ot the week’s gains by New Zealand shares, with something like seven rises for every fall. The gains were spread through the quotation list, with the notable exception of the insurance section. New Zealand Insurance, South British and National Insurance were all steady, though South British B eased fractionally.

Some of the best gains by leadens werg made by A.B. Consolidated* (2d), Claude Neon <2s). Dunlop Rubber <4s>, N.Z. Farmers’ Fertiliser (Is 3d), R. and E. Tingey (2d) and Tasman (Is). There were equivalent rises by many of the second rank issues. while only Love Construction (down Is 3d) and N.Z. Express (down 2s 6d) fell sharply. M.L.C. Bid In Australia the week was enlivened by the news of two big take-over bids: the M.L.C. offer for H. G. Palmer, and the Bitumen and Oil Re.lnery offer Dor Mt. Lyell Investments. Each offer has a cash and share exchange alternative, the cash offer being pitched below’ the market worth of the share exchange alternative The share exchange alternative offer by MLC. is worth £4.2m. on today’s price of £6 Us 3d for the 20s M.L.C. shares. For an increase in capital of only £636,213 M.L.C. would acquire the £994.082 ordinary capital of H. G. Palmer. Bora! will need to issue £1.017.183 in share script and pay £I.42UK£ in cash for the £2,034,750 paid capital of Mt Lyell Investments, valued in the market (before the Boral bid) at £51280.375. Both MLC. and Bora) have been able to make an attractive offer by virtue of the high market premium on their respective shares. The M.L.C. bid took the market completely by surprise, as there had been no previous indication that this company —the biggest insurance company in Australia after the A.M.P.—intended to branch out into retailing. Control of the H. G Palmer chain would give the M.L.C. the biggest electrical retail organisation in Australia. The high "gearing” of H. G. Palmer’s capital structure was no doubt the prime reason for the bid. and its ready acceptance. H. G. Palmer’s capital of less than £lm is dwarfed by outside borrowing totalling some £22m. Lack ot public confidence tn mortgage debentures would have posed real problems for the company as its borrowings fell due for repayment The company is now paying 10 per cent, interest on about half of this borrowed capital, and as an M.L.C. subsidiary it can expect to reduce its annual charges eventually by as much as £500,000.

The Boral bid for Mt Lyell Investments, though unexpected, is less of a surprise Boral took over Huddart Barker a few years ago and sold the shipping interests to Mcllwraith McEacharn, securing valuable bunkering contracts as part ot the deal. The bid for M: Lyell Investments appears to be well timed: the marke: for Boral shares is buoyant, while the short-term, prospects for tost of the shares in ML LyeU Investment's large portfolio are impn ving. London Quiet Quiet conditions prevailed in London stock. markets throughout last week according to Reuter’s financial correspondent Further consideration of the Budget failed to stimulate buyers while the approach of the Easter holiday was a restraining influence Prices in most section*—gilts were the chief exceptiondrifted lower and although a better tendency developed on Thursday, when the new account opened, widespread losses were recorded Generally, falls in industrials ranged to Is or so but in places losses of about 2s were recorded. Many of the more notable movements followed satisfaction or otherwise with company statements. There has been the usual post-Budget flood of company news and this continues. Gilts were subdued throughout but a small investment demand produced a firm trend particularly in long dated stocks. Banking and hire purchase finance shares were dull while insurance

shares fell beck on persistent selling.

Small losses predominated in property shares. Gold shares drifted lower early in the week but developed a better trend on the last two

days. Business here was small.

Coppers moved within narrow limits but tins made further headway in response to the recent strength of the metal price. Oils were narrowly irregular. Rubbers and teas attracted a selective demand. Dollar stocks moved up in response to Wall street’s sustained rise.

Government stocks recorded small gains. A feature of banks was a fall in English, Scottish and Australian. Golds were narrowly irregular. North Broken Hill made further headway. New Broken Hill and Broken Hill South were virtually unaffected by their respective statements. A weakness in A.O.G. featured oils. Dalgety moved up but there was little interest elsew’here. Melbourne Firm Trading on the Melbourne Stock Exchange closed for the Easter recess with prices at firm levels. A stronger market has ruled for the week and turn-over W’as well maintained. Ansett shares were in demand following the granting of the third television licence to a subsidiary company. The M.L.C. and Bitumen and Oil take-over bids dominated company news. Woolworths plan to open another 52 stores during the current year and Broken Hill South lifted its interim dividend and expects profits to rise substantially this year. Best gains for the week were in Rothmans (up Is 2d), Myers lOd, G. J. Coles 9d. Herald, Dunlop and A.C.I. all up 6d. Investors should not depend on a widespread market lift for successful operations or a vindication of their judgment, according to the Melbourne sharebrokers, lan Potter and Co. “The tactic for the present market situation must be to wait until the basic profitability of companies has improved and the ordinary share has returned to favour.”

Mr J. E. Brodie, has been appointed to succeed Mr C. E. Fuller, as managing director of the National Electrical and Engineering Company, Ltd. He was formerly managing director of Cable Price Corporation, Ltd., a subsidiary company of Cable Price Downer, Ltd.

This firm considers there Is evidence of a “positive and sustained improvement” in th? profits of Australian companies. ‘‘lnterim reports are more optimistic, industrial production is rising, and the December estimates of National Income includes in an over-all estimate ‘a substantial rise in the estimate of company incomes’.” The New Zealand premium on Australian shares which were actively traded was almost unchanged last week at 5.7 per cent., compared with 5.9 per cent, the previous week. Bing Harris The annual accounts of Bing. Harris and Co., were released during the week. The drop of 13 per cent in the consolidated net profit was caused by a fall of nearly one-third in the import licences available to the company, according to the chairman (Sir Jack Harris). “The profit for the year would have equalled the results achieved during the previous year if it had not been for the fact that one subsidiary company made a loss of approximately £7000,” he says in his review of the accounts. “This concern is an agency company totally dependent on imports ... it is now operating on a profitable basis and the directors hope that these losses will be fully recovered during the current trading year.” Stock Yields Yields to maturity on Government Stock traded in Christchurch last week: pel cent. 15/7/1963-64, £4 12s 3d per cent.; 4? per cent 15/6/1965, £4 Ils 7Jd per cent.; 3 per cent. 15/7/1963. £4 10s 2jd per cent.; 3$ per cent 15/9/1965, £4 12s 6d and £4 12s 9d per cent. Details of- transactions on the Christchurch Stock Exchange last week: Government stock. £B5BO (against £5600 the week before); local body and company debentures. £2BOO (£850); preference. 1000 (6599); banks. 887 (1919); breweries, 600 (5270); building societies, 800 (140); frozen meat, 920 (900); gas, nil (200); insurance, 2950 (1532); loan and agency, 1123 (1992); shipping, 400 (100), woollens and textiles. 3600 (11,175); Australian miscellaneous, 18,284 (12,316); N.Z miscellaneous, 16,991 (28.545); mining. 900 (2900); unlisted, 500 (1500); total, 48 956 < 75.082).