THE INVESTMENT MARKET

Otago Daily Times, Issue 26559, 6 September 1947, Page 3

THE INVESTMENT MARKET

Buyers Resume Activities MANY GAINS ON WEEK By Gregory. A better tone was evident on the Stock Exchange during the past week, as buyers resumed the initiative and competed for the stocks offering at the rates established during the lull of the preceding month. Numerous price gains were recorded as a consequence, and the week ended with a marked rise in the level of prices generally. The dividend season was in full swing to aid the trend and in all cases last year’s rates were fully maintained where they were not improved on. For the first time in its one-decade existence Macduffs Ltd., declared an interim dividend on ordinary shares and following its announcement the shares moved up as many shillings in appreciation of this distribution of 4 per cent.

The most notable feature of the period was the changed attitude to Australian scrip which resulted in Commonwealth stocks being disconcounted on local markets in comparison with their home values for the first time in 10 years. This reversal of an established discrepancy is to be regretted, and if it persists will have the effect of losing to New Zealand a not inconsiderable proportion of the inestimable asset comprised in our holdings' of Australian securities. When instructed to sell local or overseas scrip, brokers have no option but to sell on the best market existing, and whereas the exercise of this duty has resulted in the ownership of Australian securities remaining in New Zealand during the past 10 or more yeans, the higher rate now ruling in Sydney and Melbourne compels the disposal of current orders on those markets. The first signs of a changing attitude can be traced to the week when the proposed socialisation of the Australian trading banks was so abruptly announced, and the succeeding weeks have only served to heighten local distrust of Australia's political future and widen the breach between values. The following comparison of rates ruling in Australia and New Zealand on Thursday represents bv no means isolated cases and can be freely accepted as typical of the discrepancy between the two countries.

Investors are still “ flying blind ” or, Macduffs, Ltd., because the interim of 4 per cent, can be interpreted as indicating an annual distribution of 8 per cent., but if cognisance is taken of the initial payment of 5 per cent, in March a repetition next year would bring the annual pay-out to 9 per cent.; and consequently the key to future policy, presuming the maintainence of the present high profit rate, hinges on the decision which prompted the initial payment. If it was recognition of the long wait endured by shareholders then the recent interim is the better basis on which to calculate future dividend prospects. Sales were made at 50s on Thursday and the market closed yesterday at 49s 6d (buyer). 51s (seller). The big profit announced by Broken Hill South, which almost doubled last year’s result, infused more interest into the silver-lead section and speculation is rife as to what portion of the next result shareholders will divide. The new display of confidence evident on the local market during the past week was responsible for an improved tone at the close. In the preceding two weeks minor attention was given to selected leaders,) and this- was the first indication that the recession in prices was being checked; but in the current period buyers were less discriminating and whole sections of the market became involved in the reverse movement. The following table indicates the effect on values in a wide variety of stocks as a consequence of the renewed interest displayed by buyers throughout the week:—

The eighth anniversary of the outbreak of World War II fell during the week, and the occasion served to demonstrate the change which has come over market values to-day when compared with those ruling during the dark days of eight years ago. The following selected stocks are typical of the whole market:—

The comparison has little practical value, but it gives a fairly accurate barometer reading of the influence ot war-time and post-war inflation on unfettered market values. The comparison suffers only by reason of the psychological influence depressing values on the outbreak of war.

N Z. Australia s. d. s. d. Goldsbrough Mort. .. 31 41 31 9 North Broken Hill .. 70 0 72 G Commercial Bank . - 21 10 22 0 Broken Hill Pty. .. 50. 0 51 0 G. J. Coles 800 80 9 Nat. Bank of A’asia 20 0 20 3

Dunlop, N.Z.,ord. Last Week. This Week .. 9/- 9/3 N.Z. Breweries .. 54/6 55/3 Felt and Text., N.Z. 57/6 60/Consolidated Brick 15/Macduffs, Ltd., ord. 46/3 50/Woolworths, N.Z. 27/9 ' 28/3 Woolworths, Ltd. 22/8 23/3 Commercial Bank 21/8 21/10 Broken Hill South 33/9 36/6 North, Broken Hill *70/Goldsbrough, Mort 30/9 31/4 J National Bank A’asia .. of 19/9 20/1 Mt. Morgan .. .. 8/8 *8/10 General Industries 29/30/- * Buyers.

Sept. 3,1939. Sept. 3, 1947. Comm. Bank, ord. .. 15/6 21/10 South British Ins. .. 42/6 90/National Insurance .. 16/8 27/9 Wright. Stephenson, ord 37/N.Z. Refrig. Co., cont 7/9 18/Kaiapoi Woollen 11/6 28/6 Bruce Woollen 10/6 47/6 N.Z. Breweries .. .. 36/55/3 K.P. N.Z. Drug 69/113/6