STOCK EXCHANGE QUOTATIONS.

Southland Times, Issue 17306, 31 March 1913, Page 4

STOCK EXCHANGE QUOTATIONS.

A private correspondent of th» Lyttelton Times has thrown light instructively upon the necessity for full and accurate knowledge in making .comparisons between the prices quoted for colonial stocks on the London Stock Exchange, Frequently politicians and journalists compare the quotations for New Zealand 3%' or 4 per cents with those for similar New South Wales or Victorian stocks and draw conclusions as to the confidence of British investors in this. Government or., that,' hut there are factors to- be taken Into consideration: which are' known only to those who 1 are familiar with Stock Exchange transactions. The editor of the Lyttelton Times states that his correspondent ‘♦knows a good deal, more about public finance and Stock Exchange methods than the average journalist can spare time to learn,” so that his authority may be accepted. His pointis that stocks which are near maturity are always- worth more than those which have a long term to run. A New Zealand stock which has to be redeemed next year at its face value of £IOO is worth more than , a New South Wales stock which is' not redeemahle until 1920. At the present! time New Zealand 3% per cent, debentures which have to be redeemed in 1915 are quoted on the Stock Exchange at £9B to £IOO, but similar debentures due In 1940 are worth only £9O to £ 92. New South Wales. 314 per cent, debentures due in 1918 are quoted at £9B to £99, and for de- - bentures hearing the same rate of interest, but due in 1924, -the quotation is £96 to £97. Clearly, therefore, a comparison between New Zealand 3% per cents which mature in 1940 with New South' Wales 3% per cents which mature in 1914 is worthless. The explanation given by tha correspondent of the Lyttelton Times is a very useful one as showing not only that comparisons between Stock Exchange quotations may easily be valueless, but also that those who make such comparisons with incomplete knowledge may unwittingly mislead the public, who are no better informed than themselves. In any case, as the Lyttelton Times is just enough , to admit, the comparisons even when accurate do not necessarily demonstrate that-one Government is regarded nfhre favourably than another in London. Even it It be assured that , New Zealand stocks are selling cheaper than those of some of the Australian States the Lyttelton Times contends that “this is not the fault of Mr ■ Allen or of bis predecessors or of anyone else, but is due to the fact that the development of the dominion has necessitated more frequent appeals to the London money market than the needs of its neighbours havo required them to make." It is a debatable point whether the “development of the dominion" could not have been carried out more largely but of. the dominion’s own revenue. Despite a public revenue which has increased enormously we have contributed only £400,000 a year over a period of twenty years to the Public Works Fund, borrowing all the rest of the money required, much of it for works which made no addition to the permanent assets of the country. However, the admission made by the leading Opposition organ of the Dominion is a complete answer to those who have endeavoured to make capital against the present Government out of Stock Exchange quotations.