COMMODITY MARKETS AND TRADE.

Manawatu Standard, Volume LVII, Issue 200, 24 July 1937, Page 5

COMMODITY MARKETS AND TRADE.

PROTECTION OF INVESTORS. (Bv “Penloo.”) The failure in Australia of three sharebroking firms, one each in Melbourne, Sydney, and Brisbane,, u-hieli occurred recently, naturally calls attention to the relationship of broker to client. The broker occupies a fiduciary position; often the client buys or sells on the advice of • his broker, which generally is sound and in the interests of the investor. | W here a broker does a strictly com--1 mission business and his transactions 'are lor cash against the receipt or delivery of documents, the investor is sale. But in the large centres of the "orld it is at times difficult for brok- . era to keep strictly to the commission business only, for often a speculative chance occurs which may be hard to resist. As a general rule Is'ew ; Zealand share brokers do a dean comj mission business, lor after all the business in the Dominion is comparatively i small. fll the Australian capitals 1 where the exchanges deal with a long list of shares of all kinds and where investors are many, the chances for speculation are numerous. However, ! the failures may force the Australian i Stock Exchange to take action, and to I assure investors that there will not be a repetition. It is probable that| brokers will have to submit to itide- 1 pendent audits of their accounis, and perhaps also lodge a substantial sum I with the Exchange as a guarantee fund. It may also be necessary, in Australia, to introduce “.jobbers,” who would buy and sell on their own account, and do business only with brokers, and not with the general investing public. It may also be advisable to adopt the London Stock Exchange practice of having settling days. Apparently the New Zealand Stock Exchanges are not waiting for any lead from Australia, for a move is being made to introduce provisions which would be a guarantee for investors. Care will be necessary to avoid making the provisions or rules too stringent and irksome. It would be a mistake to proceed upon the theory that investors are stupid and unable to protect their own intcrests. Stock Exchange business is steadily growing in New Zealand, because the Stock Exchanges offer practically the only channel for investment. New Zealand brokers do a clean business, and while that is so investors are quite safe. The Stock Exchange rules, which are fairly stringent in themselves, are designed for the protection of investors. . THE BUTTER MARKET.

On the London butter market New Zealand salted butter is quoted at 117 s per cwt, the highest point touched this year, and 11s per cwt above the Government’s guaranteed price, which must be welcome news for the taxpayers. An encouraging factor is that the Toolev Street experts believe that the price will hold. The advance that lias taker, place is not based on sentiment, out on”the inexorable law of supply and demand.

In the first half of the current year the imports of butter into United Kingdom ports totalled 242.624 tons, as compared with 245,295 tons in the corresponding period of last year, and 252,255 tons in the first half of 1935. It will be noted that shrinkages were recorded last year and this year, the latter showing a shrinkage of about 10.000 tons compared with 1935. It is more than probable that Britain could have absorbed an additional 10.000 tons and more this year because the economic conditions are so much better. Coronation demands must have made a deep cut in available stocks and the healthy condition of Britain’s industries, and the greater number employed must also be taken into consideration.

Of . the 242,624 tons of butter imported into the United Kingdom during the first half of this year 134,208 tons were received from Empire countries, and to this total New Zealand contributed 80,977 tons, and was the only Empire country to show an increase. The figures for New Zealand and Australia for the first half of each of three years show as under:—

Titus while New Zealand’s exports have increased as compared with 1935 by over 6200 tons, Australia’s figures in the same period contracted by over 31,700 tons. Adverse climatic conditions have affected the Australian output, and her small shipments this year must have favourably affected the price for tho New Zealand jiroduct, for both butters are quoted at about the same price on the London market. Australia has experienced copious rains so far this year, and there seems no reason why

the Australian output in the approaching season should not again reach 74,000 tons, if not more. If that should happen, the competition between the two butters will not be conducive to high prices. In the first half of 1935 New Zealand was the principal supplier of butter to the British market and Australia was a close second. If Australia again reaches that stage the British market would be overloaded with Empire butter, and if the economic conditions in Britain take an adverse turn the price could not be expected to hold. New Zealand stands first in the supplies of both butter and cheese to .the British market.

New Zealand Australia Half-year Tons Tons 1935 74.752 73,983 1936 .... 75,898 55,843 1937 .... 80,977 42.257