THE MONEY MARKET

Dominion, Volume 21, Issue 291, 8 September 1928, Page 8

THE MONEY MARKET

POSITION AT AUCKLAND Dominion Special Service. Auckland, September 6. Although trade is still on the dull side money for investment is plentiful. The substantial surplus shown by the national trading account is finding its way through the financial channels which lead to the Stock Exchanges, and securities which, if not always gilt-edged, have comforting quality. This tendency has been marked for some time in Auckland. A. factor in the present situation is that few new local body debentures are on the market. Not long ago there was considerable business in such debentures that showed a return of (J per cent., but the demand has forced values to a figure which does not give such a return. Mount Eden 5} per cents., for instance, have buyers at £lOO. A sharebroker mentions that there is a constant demand in New Zealand for the better class of Australian securities. “All this buying,” he said, “is a drain on the Dominion’s capital, and tends to handicap our own industry and enterprise, but in my opinion it is an inevitable result of the artificial cheapening of niondy that is done by the Government in lending at cost price through the Advances to Settlers Department. You cannot ‘monkey’ with money without having adverse effects somewhere. I am not competent to say whether in the long run the country gains more than it loses through the State lending at lower than the market rate, but I do know that a seller of such mortgages has a chance of capitalising bis advantage, ami that his successor is probably no better off than if he paid normal interest.” The impression gathered from legal offices, where share investments are rare, is that money for mortgage investment is offering freely at a lower interest rate than prevailed a few months ago. Sound city mortgages are being arranged at 6 per cent, under some competition. In regard to farm securities, there is still some hesitancy on the part of lenders, but not to the same degree as of late. At 64 per cent, farms showing a safe margin are not being financially starved, but the lending basis is- the actual land value, with less reliance on “personality.”