INVESTMENT MARKET

Evening Star, Issue 22525, 18 December 1936, Page 7

INVESTMENT MARKET

REVIEW OF YEAR’S OPERATIONS STOCK EXCHANGE CHAIRMAN OPTIMISTIC Mr Harman Reeves, chairman of the Dunedin Stock Exchange, submitted an interesting review of the year’s operations to the annual meeting of members yesterday afternoon, and concluded by stating that lie thought they were justified in regarding the outlook for business in the coming year with optimism. “ The most important monetary development in recent years has been the currency agreement between Britain, France, and the United States of America. If world currency stabilisation can, as a result of this agreement, be achieved,” said Mr Reeves, “ international exchange stability will be established to the great benefit of world trade ,and investment generally.” Mr Reeves went on to say that the volume of business transacted throughout New Zealand had • been considerably greater than in any one of the last few years, and he thought he could congratulate members of the Dunedin Stock Exchange on having done their full share. It was astonishing, he said, how quickly quotations for many of the shares dealt in on the Exchange were affected by happenings in the Old World. One required to be always on the watch for any outside movements that might affect certain shares favourably or unfavourably. The constantly recurring unfavourable state of affairs amongst European nations and the nightmare of another war were ever before them, and affected the share market from time to time. “ In our own country,” Mr Reeves continued, “ wo have seen some drastic changes during the last 12 months in many of our laws and institutions. Amendments to the Reserve Bank Act have given the Labour Government complete control over our monetary policy and administration with practically no limit. The Mortgage Corporation has become a State institution, whilst railways and transport have once more come under political control. The new Industrial Conciliation and Arbitration Act has given the Government virtual dictatorship oyer the industries of the country. In addition, the whole of the export of butter and cheese has been taken from the farmer under the system of ‘ guaranteed prices.’ Added) to all this is an addition of taxation on the people of the Dominion of about £5,000,000, whereas in the Commonwealth of Australia taxation remissions are to be made to the extent of £5.275,000. • “ In the circumstances it is no wonder that capital in this country is afraid to venture into , new industries, but prefers to remain on deposit with the banks or in the shelter of Government and municipal securities at comparatively low rates of interest, or invested in the shares of the best Australian companies. In , October the Government intimated to holders of 1937-40 stock and bonds that it was intended to pay them, off on January 15 next, or give them an opportunity to convert into, a lower rate of interest. On October 15 a prospectus inviting conversion of £12,426,675, and asking subscription for £1,530,000 of new money was issued., This issue was divided into two sections—3J per cent.' .with a currency to 1953-57, or 3 peri' cent, with a currency to 1939-41. Whilst exact figures have not been published, it is understood that the loan was under subscribed by some £2,000,000. This amount has by now no doubt been arranged for. The present trend of interest rates is to harden, so that it may be expected this new loan will open at a discount when it comes to be quoted on tlie Stock Exchanges, “ With Australian Commonwealth Government loans ranging about 4 per cent., it is difficult to see how interest can be kept at a very much lower rate in this country. “ I think we, in this Dominion, can look forward with confidence to the future. The primary producer, is obtaining high prices for his butter, meat, and wool, particularly the last, so that a large amount of money will come into circulation during the year —a great amount of which will seek investment through members of the Stock Exchanges. May lat this juncture offer a word of warning? I would remind investors arid the public generally how, during the good times prior to the depression, they were the victims of the share hawker with his plausible scheme to sell bonds and shares in all sorts of get-rich-quick ventures. Investors would be well advisee], before parting with their money, to consult a member of the Stock Exchange, or their banker or solicitor. “In the gold mining industry the high hopes, of many promoters have not been fulfilled, but there are a few of the ventures showing profitable returns. _ This is the one industry in this Dominion to lie taxed at its source,” and it is to be regretted that the Government cannot be induced to remove the present tax and collect it on net profits, as is done in every other industry and trade' in the Dominion.”