DEMANDS FOR BONDS

Taranaki Daily News, 16 May 1930, Page 7

DEMANDS FOR BONDS

THE AUSTRALIAN MARKET. LOOKING TO NEW YORK. Melbourne, May 7. The outstanding features in Melbourne Stock Exchange circles during the first week in May have been the everincreasing demand for Commonwealth securities, with supplies being especially lacking in ‘volume, and a further drastic writing down in general investments. The extent of the demand for Commonwealth loans is amply demonstrated when it is stated that as compared with prices ruling last week, the 5£ per cent. 1936’s and 1941’s are now quoted at upwards of £1 per cent, higher., The demand for short-dated loans has been particularly keen. Developments in this section of the market put a slightly different complexion on the probable terms of the new internal Commonwealth loan, the terms of which are expected to bo announced this month. It S is to be somewhat regretted that the Loan' Council perforce will have to enter the local market in the near future for its requirements of about £7,000,000, as not only will this tend to disturb the recovery in the giltedged section, but will probably have a further adverse influence on trading and commerce, and will absorb once again floating supplies of money. Special reference has been made in

the Press of the visit to New York of Mr. Fenton, Minister for Trade and Customs, accompanied by Mr. J. R. Collins, the Financial Adviser of the Commonwealth in London. There ia little doubt that these representatives of the Commonwealth will endeavour to test out the possibilities of the New York market for a Commonwealth loan. From latest cabled advices it would appear that the Commonwealth will have to pay fairly dearly for its requirements should it decide to enter the New York market in the near future. A further reduction in the Bank of England re-discount rate has immediately been reflected in a sharp advance in almost all gilt-edged securities, although, unfortunately, external Australian loans have not shared to any extent in this upward tendency. The London industrial market is however, dull.

The tone of money rates for Australian local bodies is, if anything, slightly easier than a few weeks ago, not only by reason of the firming in Commonwealth bonds, but also due to the fact that the demands of such bodies are not as insistent as in the immediate past. While from the foregoing the outlook is perhaps brighter than recently, the future path of the Commonwealth is beset with difficulties, especially from a Government financial aspect. The Treasurer of New South Wales, Mr. Stevens, recently publicly stated That the various States will have a combined deficit of about £8,000,000 In two months’ time, and as far as New South Wales is concerned taxable in-

comes next year would be £2,000,000 less than formerly. He further went' on to state that for every £lOO advanced by the banking institutions to help, industry, only £9O was being deposited, and that state of affairs could not last for ever.