THE FINANCIAL OUTLOOK
A BROKER'S OPINION. PRESENT POSITION SATISFACTORY. FUTURE ONLY CONJECTURE. One of our representatives had an interview to-da.v with one- of the leading stock brokers" m the- City regarding the present state of the money market and tho prospects for the future. " So far as the investment market is concerned," he said, "the demand for shares has increased' considerably during the last few weeks; so much is this the ca.se th.it the turnover is considerably restricted owing to the general demand by buyersbeing unsatisfied Sellers continually a?k a little more each time, the buyer approaches him. In some rases shares have reached almost tho price, they were standing at prior to the war, notwithstanding that the situation is unparalleled in th« history of the world. The investment market is very firm. There is no speculation- The amount of speculative) bu.sin.ess being done at present is almost nil. In normal rimes fully 50 por cent. of the business done on the. various Stock Exchanges in New Zealand and Australia is in speculative <-han-.—v>,., mining and that class of share but at present and during the last few months this class of business lias shown a considerable, shrinkage. The, business bring done is mostly in debentures, preference shares, and the. shares .of banks, insurance, and sound commercial concerns. "The debenture market varies according to the ruling rate of money for mortgage purposes. The ruling rate obtainable mi iirst-cla.ss mortgages to-day is sj> per cent. Debentures must return tho investor 5 per cent, interest, otherwise he will not purchase. This is a rise of about, i to i per cent, on the rates ruling for debentures some time back. The rise, in the rate of mortgages and the rate on debentures is not caused through a scarcity of money, but owing t<> a. feeling of insecurity caused by tin* war. There ifi to-day more money lying at call and on deposit in the Post Office. Savings Banks and in the banks throughout tho Dominion than there has been for a long time. This goes to show that, tho people have, the money, -but they are not spending it. They are keeping it for a " rainy day." They are not making any more purchases at their draper, ironmonger, or fancy goods dealers' than is absolutely nocessary, consequently the general trade throughout the country must feel this 'economy of the individual.' "Rut'it is about the present and futurepro.sper.ts of the money market you want to know. Many investors have written, me stating that they have capital available, and asking'< Tor an opinion as to whether tho present is the right time to buy or whether they should delay. The. question is very' difficult to answer. Money in England" to-day is very cheap. There ■appears to be unlimited capital available for the underwriting of war loans. How long i.s money going to remain cheap? It is hard to tell. Between £200.000.000 and £300,000,000 goes into England yearly in the, wav of interest on foreign and colonial investments. Tin's must be invested again or put to some use. One firm of London stock brokers write to me : ' Our giltedt'cd market has not appreciably suffered owinsr to the. war. and ;?ilt-edged slocks still do not yield more than 44 to 4A per cent.' With regard to the. future valueof money, the normal demand for money on account of the war will be more than counterbalanced by the curtailment of credit all over the. world, especially in North and South America and Germany. In fact, we look for quite an easy market as soon as times are normal." "This is certainly refreshing, hut I fear (hey are looking on the. bright side of tho. money market. _ So many countries 'will require." to raise, immense new loans with which to repair damage, done and to make good lho inroads upon their revenue. This applies lo non-belligerent countries as well <r; to actual combatants, for in Europe countries like Switzerland, Holland. Sweden. Norway. Denmark, Italy, and Rumania (some of which may yet'be dragged into the conflict) are being put to enormous expense by the mobilisation of the forces, in addition to which their revenues have suffered a severe shock on account of the. decline in trade. Obviously, therefore, during the course of the war,' and for some considerable time after, the various Governments of the work! will make huge demands for capital, and will perforce, have to offer much more. attractive terms to investors than they have done in the past. Thau, apart from these national demands, vast sums of capital will he called for by manufacturers tind the industrial class in the belligerent, countries, and the more protracted tho war and the greater (he actual destruction of factory buildings and equipment in those countries, the more pressing will ho their subsequent need of money. Tin's should intensify the demand, and should lend to higher rates of interest. " 'These, remarks appiv, of course, more particularly to tire London money market. It mav lie quite different in this country. Our "exports should e.\cced_ £24,000,000 this vear. but our imports will be less by i some millions than they were last yen!. | This means a big surplus of money. Trade. will be quiet, but money should bo cheap. As I have already said, the situation is unparalleled in the history of the world. and to a. great extent, the future- course of | events can only be a. matter of confectu:e."
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THE FINANCIAL OUTLOOK, Evening Star, Issue 15701, 15 January 1915
THE FINANCIAL OUTLOOK Evening Star, Issue 15701, 15 January 1915
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