Investment Trend Checked

Otago Daily Times, Issue 26713, 6 March 1948, Page 3

Investment Trend Checked

INTEREST IN BEGG’S SHARES

By Gregory There was a moderate turnover on the Dunedin Stock Exchange this week, but no particular trend emanated from the course of business transacted in local stocks. This fact, however, contained its own significance as probably indicating a halt to the deterioration which has dominated the past four or five weeks. In general, price gains were infinitesimal, but losses were negligible, and exceptions either way for the most part balanced out. This country lias always been comparatively free from the destructive ravages of inflation, and is at the present time probably having its worst experience of it, but the lesson of inflation is abundantly clear from the bitter experience of European countries and can be precisely expressed—“ The worst forms of wealth in times of inflation are bank-notes and bank deposits and the best forms property and equity (or ordinary) shares.” Sound industrial shares look cheap, and it is very doubtful if the estimated £50,000,000 lying idle in New Zealand is any longer justified in ignoring the opportunities open to it for satisfactory investment. They are cheaper to-day than at any time in the past twelve months and this despite the opposite movement of commodity prices, which are, of course, the goods manufactured by industry and therefore partly represented in share value. In Australia, the pendulum swung in favour of buyers again on Thursday, but the movement is probably of little consequence. The Commonwealth markets see-saw as supply and demand dictate, and unlike local markets which become petulant, almost surly in adversity-, turnover is relatively well maintained. Metal and heavy industrial shares weakened a little but not below a point at which they have been previously in the past two or three weeks.

One exception to the local rule was the shares of Charles Begg and Company, which firmed on buyers’ offers. In the previous week an occasional buyer had nibbled, but in the current period there were more of them and they were glad to advance their quotes despite the absence of sellers. Interest is no doubt aroused by the better than speculative possibilities In store for the company as a result of the latest victim to the United States “ music-canning ” industry. With every crooner and crooness firmly plugging,” to use the vernacular, the much disputed “Now is the Hour,” this country, through the copyright iieid by Charles Begg and Company, should enjoy a lavish share of tiie astronomical rewards of any song hit “ crazed ” by America. Whilst the writer is not competent to do more than guess at the company’s royalty expectations, the fact remains that its small capital will be significant in enhancing the anticipation of shareholders. The company recently reorganised its capital structure when it invited shareholders to subscribe for one new share for every one held, thus doubling capital and raising it to £140,000. Disc, sheet music and broadcast royalties will all contribute to the pocket of the joint holders of the copyright and if film rights can be presumed—Hollywood is sure to write a “ thriller ’’ or a “ mammy ” script around it—it is possible that from this source alone a lump sum payment in excess of the total dividend paid last year would accrue as would valuable dollar earnings, Buyers at to-day’s prices at any rate have nothing to lose. At, say, 32s (id on current dividend the investment returns better than £3 13s 6d per cent, and a “ Haera Ra bonus ’’ would seem to be the minimum additional expectation of shareholders.

Kempthorne Prossers and Dominion Breweries were the only “ rights ” traded during the week but the brewery ones are nearing the end of their tether, and as has been so in all cases recently steadily weakened as time ran out. They have now been down to 21s 6d for the second time, but there is still the possi-,, bility that last-minute buyers will be more interested than they are at the moment. The Drug Co “ rights,” on the other hand, have hardened" fractionally, but only minute deals are taking place. Brokers are no wit less penny-conscious in' the case of these deals, and “ hard bargains ” are being driven bdtween the “ haves and have-nots.” Fletcher Holdings will probably be the next lot on the board and although the actual terms (other than a 1 for 3 new issue) are not announced the market for the existing shares has weakened in expectation of a premium being charged. National Timber has announced proposals to reduce capital from £70,000 to £31,500 by returning 11s per share in cash. The company has sold its mill and has no further use for its surplus cash. Although the information is gleaned from a reliable source, further details as to the company’s future are not at present available.