COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume CIV, Issue 30740, 3 May 1965, Page 17

COMMERCIAL Review Of Week’s Stock Exchange Transactions

Australian share prices for most of last week seemed to be caught in quicksands and were sinking fast, dragging the New Zealand market down with them, but a steadying on Thursday and an advance on Friday closed trading on a much brighter note.

This eleventh-hour recovery brought New Zealand stocks almost back into balance on the week, but the change came too late for Australian shares to regain very much ground.

Prices on the Australian exchanges were declining while New Zealand exchanges were closed for the Easter vacation so some of the sharp falls came from the local market catching up on the changes.

But just the same, the market in Australia was looking gloomier as the week wore on and one financial commentator there described the position as “joyless.” On Wednesday on the home market Australian share prices fell to their lowest level since the middle of 1963. Averages Low Market averages were running 17 per cent below opening levels 'for the year, nearing the 23 per cent fall between September and November, 1960, but at a slower rate. Australian prices were reacting to the two-pronged effects of curbs on the export capital from the United States and the United Kingdom.

Meantime. Wall street averages were at peak levels with the industrials—the 900.000 hurdle way behind—at 918.86, while the Australian Federal Treasurer (Mr Harold Holt) was in the United States arguing the case for Australia. Recovery by Australian prices late in the week seemed to indicate confidence in the outcome of Mr Holt’s talks. New Zealand issues were encouraged by the sudden upward trend for Australian shares and the local marked closed the week on a more confident note. Reaction to overseas moves has in the past been slow in New Zealand, but the market here is now' becoming more sensitive to international happenings.

Mount Isa Mount Isa gave the Australian market a lift with the news that it planned paying a steady 4 per cent interim dividend on its 5s shares. This makes it seem likely that the company will maintain its annual dividend at 10 per cent, in spite of the long, drawn-out industrial dispute at Mount Isa. Shareholders were told of the company’s position by the chairman (Mr G. R. Fisher) the day after the dividend announcement.

He told them by letter that the company expected a profit of £2.9m in the year to June against £5.2m last year. There had been a general return to work and the mine was now operating profitably, but the effects of the strike might also affect next year’s results. However, directors expected a return to full-scale production by the end of the year and stockholders could look forward to the future with confidence, he added. Mount Isa’s announcement was reflected by a price advance on the New Zealand market. After having slumped to 27s Id on Tuesday, Mount Isa moved forward to close the week at 30s—Is 6d ahead of the pre-Easter close. N.Z. Week On the week New Zealand issues showed 50 rises to 54 falls, while overseas stocks, mainly Australian, showed

falls out-numbering rises a little more than four to one. New Zealand leaders closed in balance, but key Australian stocks suffered severe setbacks during the week and the reversal came too late to lift this section of the list. Banks lost ground on last prices before Easter. Bank of N.S.W. lost Is 6d to 51s 6d and the New Zealand register 2s to 51s. National Bank of New Zealand lost Is 6d to 40s 6d. Australian Consolidated Industries fell to 44s 9d in first sales since Easter, but recovered to close at 465. Broken Hill Pty. sold down to 44s on Wednesday, after sales earlier in the week at 44s 6d, but lifted to close at 45s 3d. Colonial Sugar lost 3s to close at 53s 6d, while New Zealand register shares were 5s down at 51s 6d. Turn-over Turn-over on Christchurch stock exchange last week was 83.821 against 69,149 in the four trading days before the Easter break. This gave an average daily turn-over last week of 16,764 —just slightly down on the average 17,287 a day before the recess. Because of the weak market in the first three days of last week the trading pattern was irregular. Breweries were steady, frozen meats and insurance easy, loan and agency, timber and woollens up a little, while both Australian and New Zealand industrials and retailers declined. Mercer Peak J. Mercer Industries has completed its first 10 years with record figures in its latest year. Profit climbed 14.1 per cent to £35.635 after record sales and production by the parent company, J. Mercer and Sons.

During the year the company entered the export field, gaining contracts to export equipment to Malaysia, and export prospects seem good. These improved results are the benefits of large capital development carried out in the last few years, says the chairman of directors (Mr J. Mercer) in his annual report, but he draws attention to the “prohibitive effect of company taxation.

“Under existing conditions the company, engaged in manufacturer, is denied the right to finance expansion from internal resources,” says Mr Mercer. In the last three years, net additions to land and buildings have been £69.095 but in the same period the net increase in mortgage indebtedness has been £66,215. More than £94,000 has been paid out in income tax in these three years.

Only the 6i per cent preference shares of J. Mercer are listed and these required a steady £4936. Total dividend payment of £16,936, including £12,000 for the steady 10 per cent dividend, was covered more than twice by profit. Earning rate on average shareholders’ funds rose from 8.7 per cent to 9.3 per cent. Holeproof N.Z. is the major profit earner for Factors group and last week annual profits of at least £200.000 were forecast.

Directors of Factors made this prediction in a long statement to shareholders, but they pointed out it was based on continued capital spending of about £300,000 a year.

They also said the projection was based on the assumption that general economic conditions in New Zealand and Australia stayed the same. Recent amendments to New Zealand income tax laws, involving a with-holding tax of 15 per cent, would affect dividends paid to the Australian company. On dividends to shareholders, directors said that arrears and dividends had recently been paid on preference shares.

However, it was still too early to forecast when ordinary dividends would be resumed, but they hoped to disclose more about this at the next annual meeting.

Transactions Transactions last week on the Christchurch Stock Exchange were: Government stock, £8345 (£1515 Week to April 16): local body and company debentures, £5200 (£1000); preference, 3791 (1865); banks, 350 (2453); breweries, 7525 (1400); building societies, 300 (900); frozen meat, 2575 ( 3000); gas, nil (1414): insurance, 600 (2050); loan and agency, 10,020 (4703); woollens and textiles, 4350 ( 5390); Australian miscellaneous, 6300 (11,550); New Zealand miscellaneous, 47,685 (31,224); mining, 1100 (2175); unlisted 225 (1025): total, 83,821 (69,149).