INVESTMENT YEAR

Dominion, Volume 28, Issue 57, 30 November 1934, Page 3

INVESTMENT YEAR

Wellington Stock Exchange

CHAIRMAN’S REVIEW At the annual meeting of the Wellington Stock (Exchange last night, the chairman, Mr. E. Bucholz, in his address to members dealt with many matters of importance to -shareholders and investors. “'The past year,” he said, “lias shown a greater volume o£ business in financial and 'industrial shares, which may tie taken as an indication o£ returning confidence among investors. Although still faced with many problems as yet unsolved it appears that we are well on the road to a more settled state of affairs and that the greaer assurance displayed is justified. “Of course, the lower interest rates which now apply, including the reduced bank rate, have been reflected in the market price of all shares of merit, which have advanced substantially in price. We can (See no prospect of an increase in prevailing interest rates and investors must accept, on company shares of established security, a rate as low as or lower than the rates for trustee investments, but in many cases improved dividends and bonuses in cash or shares will sweeten the return, a fact which investors must not overlook. It is for this reason that today much inquiry is. being made for sound industrial stocks. “It is evident that the exchange rate on London will remain at the present high level for a very considerable period, possibly for some years. The raising of the rate has given considerable relief to primary producers and to those who are financing the farmers, with a corresponding setback to those engaged in imports. The benefits accruing at the moment must eventually be offset by higher costs of imported and manufactured goods, necessitating a higher rate of wages and salaries if the present standard of living is to be maintained. Spread over a considerable period, the effect of the higher costs may not be so severely felt, but the aim of the community should be to endeavour to bring down producing costs, including the capital cost of land, to a basis which will allow the farmer to operate at a profit on the lower level of prices which must rule in the future. Mortgage Bonds. “The Government has indicated that important provisions are to be brought down early in the New Year to deal with mortgages and providing for the issue of mortgage bonds by a mortgage corporation. Until these provisions are announced and the constitution of the corporation is known criticism would be futile, and uncalled for. Careful consideration should be given later, however, to the proposals and the effect they are Lkely to have on land values. Interest also attaches to the amount of private enterprise, if any, which will be permitted to enter into the construction of the mortgage corporation and to what extent the corporation will be authorised to deal with mortgages other than those at present held by the State. It will be undesirable to exclude private enterprise. The bonds will, if the terms of issue and the conditions are reasonable, serve to absorb some of the money to-day available for first-class mortgages at the current • low rates of interest. Provided the establishment of the corporation results in the removal of restrictions now suffered by lenders who can recover neither interest nor principal and that the values of second and third-class lands are adequately written down in value, more healthy conditions of the mortgage field of investment will be brought about. Improvement in Trade. “With regard to trade generally there is every indication that the steady improvement noticeable during the past year will be maintained. Spectacular rises in commodities are not likely to take place nor are they desirable as they always bring a reaction. Nations are beginning to realise that international trade is a necessity for all. and when this is once more established it will go a long way toward creating that confidence and trust among nations that is so lacking all over the world to-day. “In August last the Reserve Bank of New Zealand, the capital of which was largely oversubscribed, started to function, and the shares of the bank have apparently become a popular investment having regard to the premium of about 30/- now being paid for the shares. ~ “The effect this concern will have on our long-established trading banks is being keenly watched. These banks have well and truly served the public, some almost since the foundation of. the colony (now the Dominion) and this will not bear contradiction. There are probably many of us who were quite satisfied with the old regime. . •; “The Government’s action in appointing a Royal Commission to inquire into company promotion, etc., is, as I have previously stated, to be highly commended, and fam sure that the findings and recommendations of the commission, more especially those regarding Stock Exchange matters, will. I feel sure, have the support and approval of members, and redound to the benefit of the public. “The suggested establishment of a corporate investment bureau should -urther protect the investing public by direful ) examining prospectuses before being published.” ' Mr. Bucholz was re-elected chairman unopposed, and Mr. T.. K. J'? elected vice-chairman. Messrs A Ham - . ton, James Milne and W G. Morpeth were elected members of the committee.