CONFIDENCE RETURNS TO LOCAL STOCK MARKET

Otago Daily Times, Issue 27057, 16 April 1949, Page 3

CONFIDENCE RETURNS TO LOCAL STOCK MARKET

INVESTMENT MARKET

By Gregory The Stock Exchange closed for the Easter vacation on a better tone

than that experienced at any time in the preceding quarter. The market, for instance, took little or no cognisance of the new standard wage order which could normally, and reasonably, have been expected to dampen enthusiasm and derange prices, and this display of strength was concrete evidence that the deterioration which has characterised trading in recent months had in fact overstretched itself and was consequently proof against further shocks, real or imagined. Less volatile than, say, the Australian ones, it can be said of local markets that they wear the bandage long after the ache is gone, enjoy, rather than endure, a longer convalescence and are slow to accept assurances of a clean bill of health. - Local markets are, of course, predominantly investment centres and comparisons even with the relative mildness of Australia should be read as an illustration of the difference between the two markets rather than as a criticism. The patient sas “ doing fine,” however, in the closing stages and in contrast to the one or two stocks singled out for attention in the preceding weeks a dozen or two were heading for or had attained higher limits when trading ceased on Thursday and there was every indication that only the enforced respite could give pause to the trend.

Mr Nash again demonstrated his remoteness from reality by ordaining that one of the largest conversion loans he has piloted should close on one of the busiest business days of the year, and brokers and other agents of the Reserve Bank had little reason to congratulate him on any display of foresight. The public advertisements recommending conversion carried more “ punch ” in the closing stages and seemed to indicate that the pilot was having a little difficulty in berthing his huge craft. The maintenance of the 24 per cent, short and 3 per cent, long dated standard rate cannot be genuinely sustained against market and economic fluctuations and there is little doubt that artificial aids are being employed. In the United States, for instance, a Government pool exists for the specific purpose of buying and selling on the open market to stabilise loan values and Mr Nash might as well say whether he is doing the same thing. The closing of the ’• tap loan ” last December and the Minister’s decision not to replace it appeared to be calculated moves to encourage conversions of the three maturing loans mentioned in these notes on March 19, and the likelihood of a new .tap loan opening when the conversion scheme is out of the way is being freely predicted. Moderate Premium Felt and Textiles of AusU'alia, Ltd., are seeking new capital from shareholders who will be invited to apply for a new share for every two they at present hold. The company seems to be favoured by a long overdue relaxation of the fancy premiums which were imposed last year on new issues by the Capital Control Board and at 10s premium, or 30s a chare, moderation seems to have replaced harshness. Some of the premiums were recklessly applied last year, and the subsequent settling back of the Australian market resulted in more than one case of market values receding below the

original cost plus Federal imposed premiums and the belated recognition, of which the Felt and Textiles issue appears to be the forerunner, though welcome, has come at a time when the torrent of new issues has diminished to a The recent appearance of a buyer for Ballins’ Brewery shares coincided with the disclosure that the company had acquired a well-known hotel in Christchurch. Two points of interest no doubt prompted the buyer. The purchase neatly coincided with the application (solidly supported by the Hotel Workers’ Union) for a Price Tribunal lift in hotel tariff rates (whereas the sale price of the hotel would be based on the admittedly outmoded tariffs previously existing) and the likelihood that additional capital will be required to finance the purchase, which is stated to have been made at £72,000. The decision of the National Mortgage and Agency Company to subdivide its “A” £lO shares, paid to £2, into 10 £1 shares, paid to 4s, will be greeted with market approval, but the preliminary message omits reference to the B shares which, as constituted, are of £1 each fully paid. There is little reason to expect that they will be changed, and as a consequence they will now assume price seniority after a lifetime of accepting the junior role. Shareholders of the Petrous Tile Company, Ltd., are being called together in special meeting to ratify the adoption by tlte company of new articles of association. In its circular, the company specifically mentions that the new articles will conform to the requirements of the Stock Exchange, and the move can therefore be accepted as presaging a decision to list the shares. , ~ , The Stock Exchange will take its traditional extended Easter break, and will reopen on April 26.