THE SHARE MARKET.

Sun (Christchurch), Volume VII, Issue 2142, 27 December 1920, Page 10

THE SHARE MARKET.

REVIEW OFTHE YEAR.

An extraordinary year in the history of toe Christchurch Stock Exchange has just closed. The period has been marked by an exceptional activity in shares, caused to a great extent by the entry on a large scale of the small investor who has been attracted from other forms of investment. It has also witnessed an extreme fluctuation of values, and a decline to a level probably as artificial as the previous degree of inflation. Certainly it has been a year of extremes, which has closed in a period of financial depression. All types of shares are affected by* prevailing conditions, despite the fact "that, generally speaking, the earning capacity of the institutions concerned is as good as ever. Many concerns have distributed reserves during the year—some built up largely by War profits, others by a steady accumulation in earnings which had developed in preWar years. Once War conditions ceased, the general tendency was to capitalise reserves, which were in excess of the safety margin of individual businesses. Values were climbing at the beginning of the year, and except in the case of certain classes of industrial concerns employing a large amount of labour, they finned steadily until about May and June. At this period they were certainly often artificially high, the prevailing optimism causing excessive speculation. Then came the first indications of the world-wide financial stringency that was later to develop. Values began to ease slowly, although about August they largely recovered again. But was short-lived. A further aecline set in. About the end of October,lind in November, there was almost aJpanie, the recession being sharp. Tnis hewever, was not so much due to a lack of confidence in the ultimate prospects, as to a general desire to obtain cash to face engagements. The necessity on the. part of large financial interests to invest in the Government's £6,000,000 loan came at a particularly awkward juncture, when importers were often at their wits' end to meet drafts in connection with the abnornial quantity of exports. Money for invest-, ment had probably 1 never been as plentiful as it was in the early months of the year; it is quite a long interval since it has been as scarce as it is now. As money becomes available from exports, matters should soon return to normal, and the prices for shares can be expected to correspondingly improve. But for two or three months, at any rate, there seems every prospect of the period of low values continuing.

Rumours of the likelihood of spe.eial benefits to shareholders have accounted for fluctuations in the shares of some concerns. Huddart-Parkers have proTided a typical instance. Kates ait the beginning of the year were in the vicinity of A 9/-, and by April had climbed to 59/-. They then tailed off, and' at the present time their market value is about 40/-. There has been Some slight benefit above the ordinary accorded to the shareholders, in the hP. and O. Company, but the fluctuations have little relation to this. In Januarv last, shares advanced from £615 to £645. The face value is £IOO. J"rices receded to £475 in November, despite the fact that a distribution of profits was made this month. At the beginning of the year. Government 4J per cent, stocks sold at £96 and £97. They are now down to about £B9. The new Government loan issue at 5 per cent., subject to tax, has been sold privately at £Bs—the face value is £IOO. Sales Tfiave since been made at £9O, but largely to small investors who pay little <or no taxation. It is quite likely that large quantities of stock will be placed on the market early in the year by investors, who were required to subscribe. A temporary depreciation in value from this cause may therefore take place.

In common with other classes of securities, the shares of banks have fluctuated. £aorly in the year, before there were rumours of a capitalisation of reserves, the chares of the Bank of New Zealand changed hands at £lB 15/- Then came the rumours indicated, and values firmed to £2B. Npw, despite the fact that shares are subject to the rights'conferred by recent legislation, the latest price is £23. Bank of Australasia's changed hands early in- the year at £125. They ere now worth £B6. True, there has been fin increase in capital by way of a distribution of reserves, but this does not fully account for the decline in the value of the stock. Union Banks were worth £l3 at the beginning of the year. Prices trait up to £l4 12/6, and then sharply receded to below the opening level. Although mo3t insurance concerns show fin increase in the earning power from premiums, there has been a general easing. Stock of the New Zealand Insurance Company, Ltd., has freely changed hands. tn the early part of the year, prices Vrere about 34/6, but they have now fone down to about 26/6. There has een an alteration in the date of the Annual balance, but this would make little-difference in the price in the ordinary course. To take a.typical instance in finance iind agency concerns: Stock of the New fcealand Loan and Agency Co., Ltd.,