LONDON STOCK MARKET.

New Zealand Herald, Volume LXVII, Issue 20556, 6 May 1930, Page 7

LONDON STOCK MARKET.

REDUCED BANK RATE.

NEW ZEALAND'S NEW LOAN.

PROSPECT DEEMED FAVOURABLE. LONDON. May 4. Tho redaction in the bank rate came as a surprise, for the position of sterling exchange did not justify the move, all recent exchange movements having been against sterling. Consequently there is some divergence of opinion as to tho cause which induced the Bank to lower the rate.

In some quarters it is suggested that tho reduction, coming as it did practically simultaneously with a similar movement in New York and Paris, was tho result of the central bank operation and pointed to tho preparation of tho ground for the impending reparation bond issue. Another theory proposed is that the reduction was mado to facilitate tho big conversion here. The latter docs not seem a very probable suggestion. Tho Morning Post's financial editor writes: —"We do not believe for a moment that the present occasion could bo described as a suitable or even a possible one for a large conversion operation. Tho Budget has mado far too profound an impression for that event to bo possible on lines profitable to tho Exchequer, though, of course, there is always tlio possibility of email conversion operations and of tho Government's dealing with the 4 per cent, tax-compoundod loan which can now be repaid at any time on a few months' notice." • The immediate effect of tho reduction in tho bank rate on tho London Stoclc Exchange was a spectacular advance in almost all gilt-edged securities. The reduction was regarded as an indication o£ a prospect of a long period of cheap money and this brought a number of buyers of high-class securities into the market, and dealors in them apparently wore caught short.

Unfortunately, Dominions' stocks were not in favour, for they show little improvement. So fa? activity has been confined to British funds and most of the other markets are still depressed, industrial shares being especially dull.

Tho reduction in the bank rate came too late to affect cash applications for tho Queensland loan, the list for which closed on April 30, but it is expected to help tho conversion which is to close on May 6, and tho successful result of that issue is generally anticipated. New Zealand's new loan of £5,500,000 (5 per cent, at 99), which will be advertised to-morrow, will no doubt benefit from tho reduction, und is likely to go well. It will bo repayable in 1949, and will yield to tho investor £5 Is 8d per cent, Tho existing New Zealand 5 per cents., redeemable in 1945, are quoted at just over £lO2, but this price includes four months' interest. CONDITIONS IN SYDNEY. ATTITUDE OF INVESTORS. HIGHER VALUES FOR WOOL. SYDNEY. May 5. Financial authorities in Sydney state that throughout last week investors evinced a distinct preference for Government securities, which are on a higher level than hitherto. From the improvement in selling rates in that section of tho market it is inferred that owners of floating funds are becoming resigned to smaller returns and are disinclined temporarily to place their money in industrial ventures toward which there is a rather nervous tendency. The enhancement of 10 per cent, in wool values, both at tho Sydney and Melbourne sales, must involve a substantial addition to the financial yields for growers whose clips aro not yet sold. As rain has fallen over some of tho drier areas the outlook for the pastoral industry is much brighter. Tho dairying districts have received more rain in the past five days than they needed. SYDNEY WOOL SALES. MARKET STILL VERY FIRM. (.Received May 3, 10.55 p.m.) SYDNEY. May 3. At the Sydney wool sales to-day tho offerings totalled 8916 bales, of which 8767 were sold. Also 5521 were sold privately. The market ruled very firm at last week's rates, with increased support from Japan. Greasy Merino sold to 29|d. BURNS. PHILP AND CO. DIVIDEND OF 10 PER CENT. The net profits of Burns, Philp and Company for tho year ended March 31 were £231,932, which is £2275 more than in the previous year. Although working expenses increased £10,814, gross profits were £17,819 higher. Dividend at the usual rate of 10 per cent, absorbs £150,000, the appropriation to tho reservo fund is £75,000, the same as last year, making that reservo £BOO,OOO, and the amount carried forward is increased by £6932 to £31,675. The directors' report states that trading conditions throughout Australia, tho Pacific Islands, Now Zealand, and Java during the year had been somewhat diflicult. Although earnings showed a shrinkage in several directions, more particularly shipping, merchandise operations remained on practically tho samo level as the previous year, and tho company had generally maintained its position. A contract has been accepted for tho building oi' a modern fast motor cargo and passenger vessel, for the further improvement of the company's island services. DONAGHY'S ROPE COMPANY. DIVIDEND OF 10 PER CENT. < I The annual report of Donaghy s Rope and Twine' Company, Limited, for the vear ended March 31, 1930, sho\\s a net profit of £9106, in addition to which tho balance from tho previous account was £2714. Last year the net profit was £9019. Tho directors recommend tho payment of a final dividend at tho into of 6.J- per cent, making tho total distribution lor tho year tho usual 10 pci cent. This absorbs £4700; in addition the directors propose to appropriate £3OOO to tho Auckland rebuilding account and £SOO fo a special fund for tho provision of a fire alarm system at tho Auckland factory. The balance <o bo carried forward is £3619. Following the capitalisation of £11,700 of reserves in 1924, tho dividend in 1925 was reduced from tho usual 10 per cent, to 9 per cent., although the amount_ distributed was increased from £3525 to £4230, In 1926, tho dividend was increased from 9 to 10 per cent., and has been maintained at that rate since, the amount required, £4700, having been substantially less than the net profits. Those worn £9325 in 1927, £7570 in 1928, £9019 in 1929, and £9106 for the year just ended.