Review Of Week’s Stock Exchange Transactions

Press, Volume CIV, Issue 30687, 1 March 1965, Page 18

Review Of Week’s Stock Exchange Transactions

Continued easing by New Zealand issues was again a feature of last week’s stock exchange trading, while overseas stocks, although still easy, closed the week almost in balance. Bonus issue news again provided bright spots last week with announcements from Beath, James J. Niven, Mason Brothers, Truth, N.Z., and Smith and Smith.

The market seems to be easing as March 31—last day for companies to make bonus issues from pre-1958 profits—comes closer.

Possibly the market for New Zealand shares has been running at a firm level because of bonus prospects, but now with only a month to go investors are showing some uncertainty.

Several shares, with prices boosted by optimistic investors, have slipped back as bonus hopes fade. Bank’s Survey Last week, the Bank of New South Wales in its quarterly survey noted some steadying in New Zealand’s economy. The bank said that while the main indicators continued pointing to an economy ‘fully, if not excessively, committed,” the quite moderate measures announced by the Prime Minister near the end of last year now appeared likely to be providing the damping needed. “The - fall in wool prices during the final quarter of 1964, which now appears to have been arrested, has had a steading impact on an economy which a few months ago appeared to have reached the point where determined dis-inflationary measures were needed to counter excessive pressure on resources,” the bank said. Export income and farm earnings this year appeared likely to be maintained through increased output and satisfactorily firm prices for other produce. However, consumers generally seemed to be taking a more cautious view of prospects, the bank added. Council’s Warning But a warning came from the chairman of the Monetary and Economic Council (Mr E. W. Wilkinson). He said that the unprecedented export earnings of the last two years would be arrested in the immediate future and might . even slightly decline. •However, he emphasised this did not mean a downward turn in export income, but just that it would increase at a slower rate.

In its report, the council called for a reduction in the pressure of demand on the building industry, particularly for house construction. It asked the Government to reduce its spending on housing, possibly by asking borrowers from the State Advances Corporation for larger deposits before loan approval was given. - Amid the discussion on economic prospects the investor is, at present, being cautious and wary. Present trading trends reflect this caution. Bonus Issues A week after reporting higher profit in the first six months of its current trading year, Beath and Company announced a one-for-four bonus from pre-1957 profits. Mason Brothers, which last year acquired the ordinary capital of Andersons of Christchurch, also announced a one-for-four bonus issue, while J. J. Niven, Auckland engineers and merchants, will make a one-for-five bonus issue. Smith and Smith will make a three-for-seven bonus issue which will require £330,000 from pre-1957 profits. Another newspaper, Truth

New Zealand, issued plans for a one-for-four bonus, its second within four years, but a note to shareholders is cautious about dividend earnings. Further increases in cost and a large amount of depreciation to be written off this year has meant there is no prospect of an increase in dividend payment on the higher capital this year, say directors.

This is an inevitable result of the heavy expenditure incurred during the last two years on new plant and equipment.

But, they point out. the 12 per cent dividend paid in the past should be restored when the amount of depreciation is reduced. Tasman Timber Timber sales in Australia and New Zealand rose by about one-third in the last year, the chairman of directors of Tasman Pulp and Paper (Sir James Fletcher) said in his report released last week. Last year's production levels should be maintained, with possibly some improvement. Net cash earned exceeded £4.3m and the main use of the earnings was in reducing debt by £2,750,000. Expenditure on plant, forest acquisition and other fixed assets accounted for £700.000. Profit of £1,218.027 represents an earning rate on shareholders’ funds, now £11,485.376 of 10.6 per cent. Dividend, increased to 8 per cent from 5 per cent, takes £776,000 and is covered one and a half times by profit. Placer Sale By his purchase of Placer Development’s Australian coal and transport interests for about £A5.5m, the least known but most powerful individual bulk shipping owner in the world has increased his stake in Australia.

He is Mr D. K. Ludwig, sole owner of National Bulk Carriers, Universe Tankships. Seatankers and other related industries.

Placer bought its coal and transport interests in Australia only five years ago Snd the deal means it has made a capital profit of 83 per cent.

Out of the deal Universe Tankships gets coal export assets and a transport vehicle fleet in New South Wales. But these could be of secondary importance to Mr Ludwig, who appears interested in the booming iron ore export trade in Western Australia.

R. A. Brierley Investments has gained a toehold in Australia at a cost of about £300,000. It was announced last week that he had gained controlling interests in Kalgoorlie Goldfields Petroleum and Citizens and Graziers Life Assurance.

Citizens and Graziers’ directors were contemplating liquidation and a revised offer from Brierley was considered satisfactory as liquidation would involve shareholders in taxation payments. Kalgoorlie's main asset is its equity investment in Ampol Petroleum. Directors’ Policy Criticism of some public company directors’ policy came last week from a chairman of directors of several

large Australian companies. He is Mr R. A. Irish, chairman of Rothmans of Pall Mall (Australia), Swift and Company, Anthony Hordern and Sons, and a member of the board of Ampol and Commonwealth Industrial Gases.

Speaking in Perth, Mr Irish condemned directors who regarded it as essential that the company should get its finance on the cheapest possible terms such as by issuing shares at a substantial premium.

There were times when a company might have to make a premium issue, he said, but it was the responsibility of the directors to give the best possible advantage to current shareholders rather than build up a nest egg in the form of a share premium reserve which might be used for the benefit of some future shareholders.

Discussing the responsibility of auditors, Mr Irish said they had a clear duty to be more vocal about educating the public in the proper use and significance of published accounts. Stock Yields The yield on Government stock traded in Christchurch last week was: 4j per cent 15/7/70-72, £5 Os 5d per cent. Transactions last week on the Christchurch Stock Exchange were: Government stock, £5OO (£8785 previous week); local body and company debentures, £12.050 (£15,160); preference, 860 (1250); banks. 1975 (3817), breweries, 5758 (4000); frozen meat, 6468 (5814); gas, 200 (nil); insurance. 900 (2200); loan and agency, 3282 (5596); timber, 800 (nil); woollens, 4300 (624); Australian miscellaneous, 16,387 (8698); New Zealand miscellaneous, 50,186 (35,942); mining, 7200 (7200); unlisted, 1233 (794); total, 90,277 (76,594).