STOCK EXCHANGES HELP

Hawke's Bay Tribune, Volume XXIII, Issue 75, 10 March 1933, Page 8

STOCK EXCHANGES HELP

IN LOAN CONVERSION. PRICES OF BONDS IMPROVE. The Minister of Finance forwards the following in reference to the loan conversion: — The assistance being given by the members of Stock Exchanges of New Zealand in advising their clients and others as to the procedure of loan conversion is helping to speed the process, which must be completed by .March 24. Clients of stockbrokers, who as a rule are conversant with stocks and shares, are treating the conversion in a cheerful spirit, perhaps more so than some of the uninitiated investors are doing. This cheerfulness is due to the fact that since the announcement of the conversion, there has been a slight upward tendency in prices of Government bonds, showing that investors are experiencing a feeling of relief that the interest situation is being dealt with and stabilisation effected. This evidence of confidence is in marked contrast with what happened in Australia at the time of the loan conversion there. The price of Australian Government bonds fell considerably and recovery was slow, while it may be argued that the New Zealand money market is less sensitive than larger centres and, does not reflect fluctuations so quickly. This argument will not hold good altogether since the same buoyancy was reflected in the London stock quotations when £2,060,1X10,990 of the British War Loan was converted last year and the London share market with its worldwide ramifications is even more sensitive than that of Australia. The increase m value of bonds in New Zealand is due to the same feeling of confidence as was felt in Great Britain. The London “Financial News’’ stated on July 2, 1932: “Large rises in prices in all departments took place on the Stock Exchange yesterday following the Treasury’s War Loan conversion announcement. Opening prices in the gilt-edged market were adjusted to the 3.) per cent, yield basis and held these levels to the close. Prices of other fixed interest stocks were consequently adjusted to a higher level and the general optimism caused substantial rises in the speculative departments also. . . . "There was no doubt of the City’s welcome to the War Loan conversion scheme yesterday. Dealers arrived early in anticipation of additional business, and they were not disappointed, for there was greater activity in all departments than for many weeks. . . . Prices finished appreciably higher after an enormous turnover.” In the same newspaper there was a message from Paris which stated;

"The scheme created an excellent effect on Paris Bourse.” Tbe "Information Finaneiere” writes: "The mastery with which the British Government continues to put its financial house in order deserves universal admiration.” As well as from stockbrokers throughout New Zealand, information concerning conversion is available at all banks, Savings Banks and post offices, also at the Government Treasury Offices m the mam centres. At all these places the officials have been busy with inquirers, who as a rule are quite cheerful about the conversion but cannot- quite grasp what it means and how to go about effecting it. To judge by the way m which the acceptances of the new loan aro arriving at the Treasury Office in Wellington, the response to the appeal will more than equal New Zealand's loyal actions in other patriotic movements.

In addition to the streams of acceptances which are pouring in from all quarters through the channels mentioned, a considerable number of letters have been received direct by the Treasury. These began to come in on March 1, some days before the conversion forms were sent out

To quote a few of these as typical of them all. one says: “J would like to do what the Government wants us to do, whatever it is.” Another writes; “I will convert my holding which is only a drop m the ocean. I wish it was more.” While a third expresses these sentiments: “I believe it is the Jnlv way back to prosperity.” The good impression created by the legislation when it was introduced is growing apace and there is no doubt but that- conversion will go “with a swing.”