COMMERCIAL

Nelson Evening Mail, Volume LXI, 11 August 1928, Page 12

COMMERCIAL

COMMONWEALTH CREDIT

“BRING HAWKED ABOUT”

United . Preen Association—By Elootrio Telegraph—Copyright. Australian Press Association

NEW YORK. Bth August

Deports from London during June and again in July that probably £250,000 of the Commonwealth 4J, per cent loan flont.ed in New York in May was being sold : in London and.anywhere around for 89, hind that the, funds being used to purchase the same flotation in New York at 84 or a. little higher, have caused considerable interest, here, but well-informed men in Wall Street have found it difficult to explain, and have even expressed scepticism that this was so. These experts. when shown the Australian comment that the “Commonwealth credit was being hawked about,have declared that this was an unmerited slur upon the American method of handling foreign bond flotations. They declare that the situation is extremely* complex, and (involves matters of foreign exchange which are not yet clearly understood by bankers. It is pointed out that when intense money stringency struck the New York financial market early in June, bringing the call rate to 10. per cent, it had naturally a -depi'essuig;effect on the bond m arket, m'aking it dull and irregular, and carried virtually all issues dawn.

It is interesting to note that domestic bonds suffered more than foreign, and Australian issues, including the 41, felt the- effect of the stringency, hut the latter never went below 86J arid has never reached 84 ns reported from London.

The sterling exchange, however, readied as high as 488. and it is possible that shrewd speculators keeping close watcH rr> both the London and the New York markets, saw the possibility of quick turnovers by taking advantage of. the sterling premium and depressed price of 41 per cent- in New York. But this could not have lasted long, particularly since sterling is 485 and 41- per cents in Now York quickly recovered to 88 1-4. It is declared that it- was believed Australia- always recognised the differences between the New York and the London methods. New York is a frankly open market. A flotation

made here, to-day may to-morrow find its way in greater part into European markets, notably Amsterdam and London. Bankers frankly admit that this is the ease, and the technical position is such that they cannot prevent it. Experts, however, are inclined to ask questions as to the Australian position relative to 4f per cent stock. They insist that these bonds are good, are recognised as such here, and will continue to rise as soon as the money stringency ends, (Inidate of which, however, they are not prepared to set. They ask, nevertheless, why the Commonwealth sinking fund cannot he utilised to purchase these bonds hem whenever discount on the price would malm 1 the transaction profitable. They moreover point out that hankers in certain flotations undertake to support the price of the bonds they underwrite by buying in the open market up to 10 per cent of the dotation if securities drop below a certain figure. Experts ask whether in (he ease of 41, per cent the Commonwealth had made any such arrangement..

AUSTRALIAN MARKETS

SYDNEY, 9th August

Wheat, growers’ lots, 4s at country stations. 4s lid ex truck at Sydney; (lour, export trade dull, local £l2 10s; bran. £6’los: pollard £7 10s; maize 3s 9d. 4s Cd ; potatoes, Tasmanian £6 10s, £7: 'onions, Victorian,' £l3, Japanese, £16.: • •’ - • ••

ADELAIDE, 9tli August.

Wheal, growers’ lots 4s ll.ld, 5s Id; flour, bakers’ lots £1.2 15s ; brim -’£s 17s 6d : pollard £7 2s 6d.

(Received 101 h August, 11.15 a.m.) MELBOURNE. This Day,

Wheat, nominal, 4s ltd, ss; flour £l2 7s fid ; pollard £7 10s: oa.ts quiet, 3s Gd, 3s Oil; barley. English, steady. 5s lOd ; potatoes, steady, £2 15s, £3 10s: butler, weak, Is 8d; cheese, quiet, lid.