MONEY AND MARKETS

Otago Daily Times, Issue 20286, 20 December 1927, Page 9

MONEY AND MARKETS

LONDON STOCK EXCHANGEBUTTER TRADE DULL. WOOL POSITION SOUND. (Free* Association—Bj Telegraph—Copyright ) LONDON, December 17. The Stock Exchange is ending the year in a most satisfactory manner, for considerable animation prevails -in most markets, with gilt-edgos leading the way. The activity in these has been more notable than for a long time. Prices have improved all round, and all the recent new issues show strength. The unexpected appearance of the New South Wales £7,000,000 loan gave only a temporary check, and its reception was favourable. As one financial writer says: “It is significant that the underwriting of this loan was easily, arranged, as evidently those accepting the responsibility believe that even if they are left with a portion it will not be necessary to nurse the scrip for long.” In this connection it may be pointed out that within the last two months dominions and British Government loans amounting to £33,000,000 have been issued in London. Some, like the Commonwealth loan, were left largely in the underwriters’ hands, and others were fully subscribed. But, with only one exception, all these are now quoted at a premium. Commenting on this, one of the leading stockbrokers said: “There is plenty of money here for the dominions.” Many new issues are talked about as likely at the New Year but Australia’s wants seem satisfied for the present. There is unlikely to be any difficulty in placing them, for it is generally expected that money will be cheaper soon after the year is turned. Some rather acid comment comes from the Investors’ Chronicle, which points out that the New South Wales loan brings Australia’s borrowing during the current year to nearly £57,750,000, of which £35,000,000 represents new money. Australia’s imports for the year ended June 30 exceeded the exports by £20,000,000. This is largely a reflection on overseas borrowing. This excess gives cause for concern. Another consequence of over-borrowing is that prices and wages are inflated. Large imports, owing to th e tariff, have greatly augmented the Customs revenue, and this has enabled direct taxation to be reduced. This causes some people to think that Australia is more prosperous than the facts justify. The hopes recently prevalent of an improvement in the butter market have not been realised. The trade has been phenomenally dull, with falling prices. Why this should be th e experts cannot explain, for the statistical position seems satisfactory. One reason advanced is that the invisible stocks (a term used for retailors’ holdings) are larger than they were believed to be. Certainly the retailers have been holding off for some time, sp apparently they had enough to go on with. Yesterday’s official report states that there was more inquiry at reduced prices, and as the retail price has been lowered to Is 8d per lb there seems to be some ground for anticipating better trade soon. Commenting on the wool position, the Economist’s correspondent writes : “ From what has been seen in London there is no indication of any setback in values in the near future. The policy should now be on e of consolidation rather than an attempt to push prices higher. During the next month a big weight of direct imports will be arriving, and in view of the drain upon financial resources involved in lifting all this wool, we think that for the present the values of both merinos and crossbreds are fiigh enough. The users in the consuming centres have found that it has been impossible to hand forward to the ultimate consumer the last rise.”—A. and N.Z. Cable.