NEW ZEALAND SECURITIES

Otago Daily Times, Issue 23672, 2 December 1938, Page 10

NEW ZEALAND SECURITIES

ONCE FRONT RANK INVESTMENTS RISK IN THEIR RETENTION (From Our Own Correspondent* (By Air Mail) LONDON, Nov. 10. New Zealand securities provide London Truth of November 9 with the subject of some warning comment for its readers. Private advices which the writer has received “ show that business interests in New Zealand are gravely concerned about the result of the recent elections there, for the policy of the party that has again returned to power is openly stated as socialisation and control of production. distribution, and exchange. I learn that the New Zealand Reserve Bank is now completely dominated by the State, and that the acquisition of the Bank of New Zealand is probable, “ It is expected that taxation, thcburden of which is already seriously affecting industrial and other companies, is likely to become more onerous. The position suggests the probability of a further fall in New Zealand Government securities, and because of this holders should consider. the advisability of making an exchange. Unfortunately, a reduction in income would have" to be faced by an exchange into a similar security. “ For example, New Zealand 4 per cent. 1943-63 is quoted at 96, giving a flat return of a little over 4 3-16 per cent., and a yield with redemption of fully 4 5-16 per cent South Africa 4 per cent., with the same redemption date, is quoted 103 J, at which the flat yield is a few pence over 3| per cent., while with redemption the return is 3i per cent. POSSIBLE CAPITAL DEPRECIATION Naturally, holders of New Zealand stocks are reluctant to sell and accept such a sacrifice, but omission to do so might mean a heavier loss. later on through capital depreciation. “ The chance that the Socialist Government will be turned out of office at some distant date is too remote to justify the risk involved in retaining New Zealand securities, prices of which show that the credit of the Dominion is now on a lower basis than that of the Australian Commonwealth. It is a pity, for many English capitalists are involved, and in the past New Zealand stocks were rightly viewed as front rank investments ”