Few Changes in Price But Moderate Turnover

Otago Daily Times, Issue 27040, 26 March 1949, Page 3

Few Changes in Price But Moderate Turnover

INVESTMENT MARKET

By Gregory

Soft patches were still being ironed out of the share market during the week, but a reasonably good turn-over was experienced during the' process. Price movements were very limited and the defections were evenly matched by gains. It is this typical but natural day-to-day minor movement in share prices which limits the number of people who interest themselves in Stock Exchange investments because it occasions, perhaps, a concern, and certainly a doubt, that the market value (the word is used with reluctance) of the share they buy to-day may be less to-morrow. In point of fact, such an eventuality should concern the speculator and perhaps worry him, but the investor realises that price movements are purely incidental and if he has. bought for more or less permanent holding the actual value (the word is used advisedly) and the potential income returns are no whit changed by market movements one way or the other.

Share prices generally have now assumed realistic levels and the task of brokers in recommending investments has been considerably simplified and made less onerous than at any time in the past two years. The requirements of investors vary considerably, but the emphasis is almost always on safety, and where he makes a departure from that rule it is only because he is willing to back his own judgment that the “ unsafe ’’ share will weather a particular storm and eventually come right with greater profit than can be secured from what the Americans call “ blue chip ” stocks. By the inclusion of selected issues yielding better than 4j per cent.—and they are to be found amongst the meat section, light industrial and preference issues—a sound plan can be evolved to-day embracing a safe spread and yielding a practical 4 per cent, tax free. New Zealand Newspapers were turned over during the week at 50s, and a buyer stood at that figure yesterday. The merest whisper has gone out that dividend prospects are encouraging and the tip can be relied upon. Woolworths, Ltd., which had slumped to 19s 6d ex the 10 per cent, dividend, had the best gain of the week when they were taken at 20s 3d on Thursday. There was a belated flutter on Tuesday after northern sales at 19s 6d and they were avidly sought at 20s locally and made the 20s 3d mark immediately after the midweek holiday. The flutter was belated because the news was published locally on Monday that the company had decided to increase the authorised capital to £5,000,000 from the present figure of £2,000,000, and was known in Sydney on the previous Friday. The two markets reacted contrarily, however. The Sydney price was 22s 9d on the previous Thursday, 22s 3d on Monday last after the announcement, and later recovered to 22s 9d. In New Zealand the market ignored the news until late on Tuesday and then promptly lifted the price 9d to 20s 3d (the difference in cross-Tasman values reflects portion of the exchange discrepancy between currencies) and steadied there. In making the announcement the company was at pains to add that there is no immediate intention of issuing any of the new capital and again in the message reiterated that the present capital was adequate for current requirements. _ , Bank of Australasia and Union Banks were considerably firmer over the week, and in the case of Asias (as they are familiarly known) the price firmed from £9 12s 6d to £9 17s 6d, whilst Unions advanced from £9 10s to £9 15s. These two huge money-changers have an amalgamation schejne in cold storage, which dates back to the month prior to Ihe Federal Government’s announcement

of its intention to nationalise the banks. That was in August, 1947, and in November of the same year the Bank Act containing nine parts and 61 sections was tabled in Canberra and aroused the wrath of a nation traditionally steeped in freedom and willing at whatever cost to challenge the right of politicians to deprive them of it. To-day the highest court of English justice sits in judgment and bank shares advance in price as the day of the verdict approaches. Shareholders of Zinc Corporation have now received their circular letter (of unwarrantable length) setting out the proposal that shareholders should exchang their scrip for pre-determined holdings in a company to be known as the Consolidated Zinc Corporation, Ltd., which (as mentioned in these notes last week) would become the parent of and wholly own Zinc Corporation, Imperial Smelting, Sulphide Corporation, Broken Hill Corporation. (ordinary capital), Enterprise Power Company, and own 32 per cent, of the capital of New Broken Hill Consolidated, 50 per cent, of Broken Hill Associated Smelting, and 32 per cent, of Western NSW Electric Power. The scheme involves a capital of £11,024,573, and is evolved to simplify control and management of Zinc Corporation’s diversified and mounting interests, and, generally speaking, must be accepted on face value ard the statement by the directors that they “ recommend the offer for acceptance as being an essential step in a scheme of consolidation which will be of great benefit to the future of the undertaking ” taken as a guide. One of the most extraordinary facts to be gleaned from the letter of offer is the minute extent to which the majority of directors are themselves financially interested in Zinc Corporation. One holds £23 of ordinary stock and two ordinary shares of 10s each, another £45 of stock and 100 shares of 10s, and none of them have as much as £250 bf equity holdings. We include this information because there is possibly no company in Australia or New Zealand so generous to its directors, who receive £IOOO a year plus 2 per cent, of net profits to the limited extent of an additional £2500 a year each, and provision is made under an additional five clauses for other means of specially recompensing directors. Wilson Malt Extract made its first dividend announcement since abbreviating its title and industrial interests which, with the declaration of a final 3£ per cent, yesterday brings the annual distribution to 7 per cent., if one ignores the 10s distribution at the time of the sales of the brewing interests. The market appreciated the company's evident ability to maintain a substantial rate without the aid of the “ old and nutbrown,” and a sale was registered immediately afterwards at 36s 6d in contrast to business at 355.