COMMODITY MARKETS AND TRADE.

Manawatu Standard, Volume LVI, Issue 310, 28 November 1936, Page 4

COMMODITY MARKETS AND TRADE.

THE STOCK EXCHANGE YEAR. (By “Penloo.”) Tlie annual meetings of the. Stock Exchanges having been held, it may be assumed that for all practical purposes the Stock Exchange year has ended. The exchanges will, of course, | continue business until the long vacation begins just before Christmas. The year lias witnessed considerable activity on the Stock Exchanges of the Dominion; trading has been good at all centres, and prices generally have been fairly well maintained. This activity has been due to the plethora of funds seeking investment, and that in itself is due to special causes. Capital is now mostly restricted to one channel of investment, and that is the Stock Exchange. Whereas previously capital found an outlet in mortgage investment, that outlet has contracted ; consequently business is mostly centred in the Stock Exchange. This being the case it is quite evident that activity will continue, unless there comes a change in the economic conditions. '* , iere is plenty of money available for investment, as is shown by the returns of the trading banks, and the higher wages are adding considerably to the volume of money in circulation. Moreover, produce prices are higher than they were, while the wool cheque this season will add several millions to the income. With this abundance of money, . a considerable proportion must go into Stock Exchange investments. During the year there was to be noted a distinct drift from gilt-edged securities to industrial shares. With the depression Steadily lifting ’a number of joint stock companies have earned larger profits, and have thus been able to disburse larger dividends. Furthermore, many companies have come on to the dividend list for the first time since the depression began. The dividend list is now large and impressive. No reference was made at any of the Stock Exchange meetings to the formation of new companies. The scope for enterprise ill this respect is great, but apparently confidence is lacking.

Operating costs of all joint stock companies in the Dominion must be appreciably higher, because oi the general increase in wages and the higher taxation. A new concern would be greatly handicapped from the outset and investors would have their capital tied Up perhaps for two or three years. It is also a Question whether the increased costs will not reduce the prol fits of the companies how operating and if their profits are reduced the (dividends are likely to be lowered. There are possibilities of a slackening in Stock Exchange trading because of this. However, it is unwise to make any prediction, for there are many cross currents that have to bo takop into consideration in connection with the investment market. THE WOOL MARKET. The Dominion wool sales for the season 1936-37 began in Auckland to-day under the happy augury of a strong London and Australian demand. "Wool is wool this season, and there is every indication that the demand is running just a little ahead of supplies. looking back on the wool market, wool has had a chequered career. For three consecutive seasons the price was below the cost of production, notwithstanding the reduction in costs. Those were the years when unemployment was very extensive and clothing could not be bought so freely as previously. As move and more secured employment the demand for wool steadily increased. During the past twelve months, owing to the enormous expenditure on rearmament in all the important countries, providing work for increasing numbers, and the expansion in the personnel of navies and armies, more money has been spent on clothing, hence wool is getting its turn. How long this will last is a.problem, but the end is not in sight- The price, however, may not rise very much higher, otherwise substitutes which science has brought to a great degree of perfection may check the advance. The wool cheque for this season should be substantially larger than that for last season, but a good percentage of it will be taken by the Government in land and income taxes.