MONEY MARKET

Manawatu Standard, Volume XLVIII, Issue 239, 6 September 1928, Page 6

MONEY MARKET

COMMENTS BY BROKER. EFFECT OF STATE ADVANCES DEPARTMENT. (By Telegraph.—Special to Standard.) AUCKLAND, Sept. 5. Although trade is still on the dul side, money for investment is plenum . The substantial surplus shown by the national trading account is finding its way through tho financial channels which lead to the stock exchanges and securities which, if not always g - edged, have that comforting quality. This tendency has been marked t some time. It is a common thing tor cilt-edged securities to rise in price durnic perods of trade depression* Investors concentrate on securities of the higher class; competition for them develops and tho return becomes lower and lower until the point is reached when the investor, for the sake of a higher return, is prepared to take the risk of a more speculative enterprise. This point has not been reached. Although there is much more ino ’’ e y investment, those controlling it haie not regained sufficient confidence to turn their attention to speculate e fields. Most, investors are more concerncd about the security of their capital than the getting of an extra percentage which involved risk. Tax-free Government bonds have increased in price during the past months and are now at a figure which makes them much less attractive as a money-earning investment. Ihe me and a-lialf per cents have gone to a premium, and the five and a-ciuartei per cents are selling pretty readily over the post office counter. . ~ A sharebroker mentions that there is a constant demand in New Zealand for the bettor class of Australian Securities. Such banks as the New South Wales, Union, National Bank of Australia, the English, Scottish and Australian, and the Commercial are taking New Zencapital, and he believes that as many Union Bank shares are held in the Dominion as the Commonwealth. Colonial Sugar stocks are also sought by New Zealand investors, and there is also some demand for the safer industrial stocks of Australia. “All this buying,” he said, is a drain on the Dominion capital, and tends to handicap our own industry and enterprise, but in my opinion it is the inevitable result of the artificial cheapening of money 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 somewlieie. 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 rates, but 1 do know that tho seller of such mort-gao-es has a chance of capitalising his advantage and that his successor is probably no better off than lMie paid tho normal rate of interest.”