Buying Strength a Feature Of Stock Market Operations

Otago Daily Times, Issue 26772, 15 May 1948, Page 3

Buying Strength a Feature Of Stock Market Operations

By Gregory. The upward surge of the share market reached a peak during the week which ended yesterday, when turnover was of proportions not attained since February. A notable feature of trading was the unusual weight of business actually transacted on the call-overs, a development which invariably denotes keen buyer support. The precise function of the daily calls is, of course, the transaction of business, but in times of stable markets the call usually becomes little more than an instrument of negotiation, which discloses buyers and sellers and initiates subsequent vestibule or perhaps telephone negotiations. Throughout the greater part of the week buyers stood where sellers have impatiently, almost despairingly, stood for over two months and where two, three or more vendors had vied for the chance offers of

occasional buyers the latter were, this week, assembled in strength whilst sellers were remote and taking full advantage of their new importance.

Meat shares had consistent buyers all the week with the two New Zealand Refrigerating issues in the van of the movement. The contributing issue, invariably the more popular, have given way on this occasion to the fully paid shares, which, conspicuously cheap at the beginning of the month, moved ahead on the “little ones’* both as to comparative value and buyer support. The 10s paid contributing shares lirmed earlier to 19s, but remained on the. figure throughout the current period and when the fully paid shares took over the running they moved up to 38s 3d with buyers still outnumbering sellers. Canterbury Frozen Meat shares had a keener demand at £l6 than for many months and at this figure represent their highest point in many years. Annual balance date is not until November, and as no interim declaration (which would be due about this time) is ever made by the company, buyers are endeavouring to secure supplies well in advance of expectations. South Otago Freezing had buyers at £G 11s, the figure at which the last reported sale was made, and Waitaki Farmers were sought at a brokers’ margin below last known business of £8 ss. Unusual Announcement The market for Mount Lyell shares during the past few weeks has been markedly pessimistic and worst fears were realised yesterday when a telegram was read on the afternoon call advising that “ the directors had decided against paying an interim dividend." The qualification is unusual in dividend announcements and can almost be interpreted as an apology. When the company resumed payments last December after a two years’ absence from the dividend list, reasonable expectations were that regular interim and final dividends would again be distributed. The expectation was further heightened by a subsequent rise •in copper prices and ttuvitntntsiiitiiiitiiiißtiiiiiiiXZtuuxiii

Mount Lyell shares will lose a number of friends as a consequence of the latest dedecision arrived at would be most carefully deliberated, however, and shareholders will, not be unmindiul of the investment in Metal Manufacturers entered into by Mount Lyell a few months ago. Some 573,000 shares were taken in a new concern, m which Metal Manufacturers and Standard Telephones and Cables, Ltd., amalgamate forces, and the question was asked in annual meeting as to how Mount Lyell proposed to finance the investment, payments for which are spread over two years. The chairman answered the question in this way: ” So far as the first Payment is concerned, there will be no difhculty in financing that. The are spread over two years and I .hope we will have no difficulty in financing later payments. If we do, we might have to approach shareholders for more capital but I am not suggesting this at present. This statement may, be related to the announcement of .no l interim dividend, and it is'not unlikely that a call on Metal Manufacturers has absorbed the surplus available for a dividend, and the decision not to pay p dividend could in the light of . the foregoing be read to mean that the company (or the Capital Control. Board) has likewise decided against the issue of fresh capital to finance the - progressive payments on. the new investment. Befoie the receipt of the telegram buyhrs had quoted on the morning call at 31s 3d, sellers at 31s Gd, .but when the telegram was. read in the afternoon a tentative buyer at 30s was sold a parcel aftei two vendors had competed on the journey. We have already said that this market had a presentiment of poor news, and if current disappointment lowers the value of the shares below 30s the stock may be worth watching. Hard Bargaining Brokers have an invariable reputation for hard bargaining, and more Often than not will decline a deal perhaps involving some hundreds of pounds for the sake of a penny a share, but new depths, or heights rather, were indulged last week when a patient reader (the auctioned of the call room) brought a tardy buyer and seller together to conclude a aeal for 500 Waitahu Gold Mining shares at lid a share. The buyer, having in mind a sale two week ago, had ventured out at "«d buy.” A seller came on at 3d, and another at 2d, later reducing to lid, when the buyer advanced his bid a tanning to the. modest “ brownie.’’ At this point a stalemate haef. developed bu 4. patient and proficient wielding of the hammer, which would have closed the market on that particular stock, brought the shameless bid of lid, and the sellei consenting, a transaction took place. Thei is precedent for this minute dissecting of the penny, but not during the past 10 years.