Review Of Week’s Stock Exchange Transactions

Press, Volume CII, Issue 30129, 13 May 1963, Page 20

Review Of Week’s Stock Exchange Transactions

<By Our Commercial Editor) Share prices continued to advance last week. Leading New Zealand issues made about twice as many gains as losses but secondary issues made more than eight gains for every loss. Overseas issues made three gains for every two losses. The rate of advance of New Zealand leading issues has declined noticeably in the last few weeks; two weeks earlier there were four times as many rises as falls in this section. The swifter rise in secondary issues suggests that investment demand has. to some extent, been diverted from the leaders.

Markets were less active last week. This was reflected both in the number of issues traded throughout New Zealand (190, compared with the previous week’s 205) and in the number of shares traded in Christchurch (77,000, compared with 87,000).

There is more evidence to suggest that the market is consolidating recent gains than that prices are levelling off. The advances made by most of the leading issues earlier this year were recorded when business confidence generally was at a lower level than at present. In such circumstances investors normally seek the security of a big company Now that businessmen are taking a more optimistic view of current prospects, many investors are prepared to be more venturesome. All Favourable The latest economic indicators are nearly all favourable. The overseas exchange transactions for the year ended March 31 show record export earnings and healthy Surpluses in the balance of trade and in the over-all balance, A bull point for manufacturers, distributors and investors is the' low level of private imports last year—- £ 236 m, compared with £ 248 m the previous year and £275m in 1960-61. This suggests a sharp run-down of stocks by March this year, ensuring a good demand for this year’s supplies of locally-made and imported goods.

Banking statistics indicate a high degree of liquidity and easier credit this year The recent improvement in export earnings should do much to promote the return of confidence which will reactivate consumer demand. Company reports during the week bore a cheerful aspect. Two newspaper companies raised their dividends and a third reported an increased profit: N.Z Motor Bodies announced a bonus share issue; British Pavements increased its dividend; and Alliance Textiles reported that business was now “much brighter.” Wattie Suspension Scarcely more surprising than the suspension of J. Wattie Canneries from the quotation list last week was the firm's reinstatement, after only two days’ suspension. Announcing the suspension on Monday morning, the president of the Stock Exchange Association (Mr J. B. Taylor) said this action was being taken “pending investigation of the position.” The next dr , he said; •‘Now that he public have been made fully aware of the whole position, and in the interests of the investing public, the executive of the Stock Exchange Association has decided that the suspension will be lifted as

from 9 a.m. on May 8.” The investing public can only assume that the promised investigtaion of the position by the executive of the Stock Exchange was made between 10 a.m. on Monday and 5 p.m. on Tuesday. Why the shares rose nearly 2s in five weeks, and whether some investors had advance knowledge of the one-for-five share issue are questions which have not yet been publicly answered. If the Stock Exchange’s lightning “investigation” produced satisfactory answers to these questions, the Wattie directors were entitled to expect the Stock Exchange to clear their name. Light Penalty The Wattie incident leaves the impression that the directors of any listed company who are caught out in a prevarication within 48 hours can expect no more than a two-day suspension as a penalty. If the Stock Exchange wished to make an example of one listed company as a warning to others there have been more flagrant breaches of the listing requirements and of directors’ obligations to shareholders in recent years. The Wattie’s announcement of the new issue actually had little effect on the market value of the shares (which had eased from their peak after Mr Wattie’s “no good reason statement). 1963 Peaks Second-rank issues were prominent among New Zealand shares to reach 1963 peaks last week. New Zealand shares to reach highest points for the year were Tui Brewery, P.T.Y., Armstrong and Springhall. Ballins Industries. Claude Neon, Colonial Motors, Consolidated Brick, Dental and Medical. Dominion Fertiliser, Early Brothers, Fletcher, Golden Bay, Hallenstein. K.D.V., McKenzies. Neill Cropper, New Zealand Industrial Gases, New Zealand Newspapers. Phillipps and Impey, Pukemiro. Sharland. Skellerup. Smith and Brown. Tasman, and Wilson and Horton.

Demand for leading industrial shares tapered off on the Melbourne Stock Exchange last week and prices eased slightly, according to a Melbourne cable.

Expectations of improved results in the sugar industry attracted attention to sugar shares and some good gains were recorded in these stocks. Retail shares and base-metal issues were firmer. Henry Jones announced a

one-for-six issue and the likelihood of lower profit for the year, while Sidney Cooke and General Industries report considerable improvement in profits. Trading ended with Colonial Sugar up Is 3d on the week. Dunlop rose Is and Herald 3d. John Lysaght were down Is 3d and E. Zinc lost sd. London Unsettled It was an unsettled week last week on the London stock market, with, for most of the time, sentiment influenced by unfavourable factors such as the threat of a rail strike and election uncertainties, according to Reuters financial correspondent. However, there was very little selling and investors still preferred to take the longer term view which becomes more encouraging daily. The Chancellor of the Ex-| chequer had some helpful things to say and the latest report from the influential national institute of economic and social research was particularly encouraging. The steady flow of good company news helped while the advance on Wall street to a new 1963 peak did not gq unnoticed. But in spite of all this, prices in the main were lower on the week which was due more to buyers holding off. An important factor, of course, was that the capital gains tax was a considerable restraining influence on the I larger speculator. Leading stocks to end the week lower included 1.C.1.. Tate and Lyle, Turner and Newall, Pressed Steel, Hoovers, Babcock and Wilcox and Vickers, although the last named were helped at one time by the orders for Polaris submarines. Dollar Stocks Dollar stocks followed the trend of Transatlantic markets. Gilt-edged were supported at times and ended the week fractionally better, j South African political uncertainties overshadowed gold shares and prices moved lower fairly sharply on some days but there was some recovery towards the week-end. Coppers see-sawed while tins were dull. Oils inclined to ease, although B.P. were wanted following the report and full accounts. Shell were little affected by the quarterly figures. Rubbers eased in response to disappointing dividends but teas were selectively bought. Australians attracted selective buying. Government stocks were little changed but several gold and base metal shares moved up including G/M Kalgoorlie, N. Kalgurli, Western Mining. New B.H. and North B.H. R.T.Z. gained fresh ground in further response to their results. A partial "eaction in A.O.G. after the week before’s sharp rally featured oils. The ilew Zealand premium on Australian shares last week rose slightly to 5.7 per cent.; New Zealand investors bought their Australian currency at £NZB4 10s to £AIOO. One or two shares appeared to be out of line— Bank of New South Wales and Colonial Sugar in particular.

Stock Yields

Yields to maturity on Government stock traded in Christchurch last week: 4 3-8 per cent. 15/11/1963, £4 Ils 6d per cent.; 3 per cent. 15/6/1961-64, £4 12s 5d per cent.; 3 per cent. 15/7/196264, £4 10s Id • per cent: 3 per cent 15/5/1964-66. £4 Ils lid per cent.; 4? per cent 15/10/1965, £4 13s 2d per cent, and 5 per cent. 15'6/1973-75. £5 3s lOd per cent.

Average yields for Government stock last week showed short-term and long-term slightly eas.er, while med-ium-term improved. The average short-term yield was £4 15s sd, average, mediumterm £5 3s and average, long-term 3s 11' Details of transactions on the Christchurch Stock Exchange last week are as follows:—Government stock. £7525 (compared with £6OlO the previous week); local body and company debentures and stock £3440 (£2oo'i; preference shares 1750 ( 380); banks 180 < 4445); breweries 7700 (10.400); frozen meat 2814 (1850); insurance 9020 ( 900); loan and agency 325 ( 4224); shipping nil (100); timber 500 (ml); woollens 5407 ( 4264); miscellaneous (Australian) 18.815 (16,843); miscellaneous (New Zealand) 28.200 ( 43.720); mining 1350 (50); unlisted 870 (250); total. ’3.931 (87.426).