NEW ZEALAND STOCKS

Otago Daily Times, Issue 23517, 4 June 1938, Page 6

NEW ZEALAND STOCKS

FALL IN LONDON (From Our Own Correspondent) LONDON, May 11. The price ot New Zealand Government stocks has dropped approximately t,wo points on the London Stock Exchange in the past month a number of holders selling after the announcement of the new social services by the Prime Minister (Mr M. J. Savage). The , “ persistent weakness ” of these stocks, it has been confirmed, can be attributed to no other cause. “ The behaviour of the New Zealand Government has made a number of people very nervous.” a prominent stockbroker said to-day. ” Every effort has been made to check the fall, but with little success. It is impossible to forecast how long this weakness will persist It depends a great deal, of course, on the action of the Government At present, the only result of the fall is a certain loss of prestige to New Zealand, but if the position continues it is possible that some difficulty might be met in the event of the Dominion desiring to raise a new loan in London.” The fall has naturally been the cause of newspaper comment. “ The weakness of New Zealand stocks is almost certainly a reflection of fears as to political developments in that country.” the Glasgow Herald has stated. “ This possibility caused a very moderate amount of selling orders and an exaggerated decline in the quotations for town loans and similar securities, accompanied by a widening of the difference between buying and selling prices to 10 points in several cases.’ The latter is more important than the former to the would-be seller, and there can be little doubt that it arises mainly from the fact that individual loans' are so small. When the outlook is ‘ set fair ’ the jobber does not mind taking stocks on his books, although he knows he may have to wait days or even weeks to get even again. As soon as there is any doubt, however, the narrowness of the market exercises a crinnling influence.” The Daily Express said: “The general view in the city is that although new social services, with the necessity for higher taxation, are likely to lead to increased costs of production in New Zealand, the increase will not jeopardise the trading surplus available for payment of interest on the external debt. It is hoped that the Parliamentary Committee now sitting in Now Zealand to examine the proposals will modify them, at least to a certain extent.”