COMMERCIAL.

Timaru Herald, Volume CXXXIII, Issue 18762, 29 December 1930, Page 6

COMMERCIAL.

A NNUAL REVIEW OF THE SHARE MARKET.

The busines sof the Stock Exchanges closed for the year on the 22nd inst., and will not be resumed until January 12, 1931.

During the last month there has been a distinct falling off in the number of sales recorded. This is not an unusual happening, as the Christmas holidays are generally preceded by a lull in financial operations, but it was more pronounced this year. The year 1930 was one in which falling prices were noticeable from the beginning till the close. Since 1914 there has been a steadyin some cases a phenomenal—rise in the prices of almost all shares. This increase has been almost continuous, save for a setback in 1921, when values slumped heavily, but rapidly recovered in 1923, and reached their peak about two years ago. There are now no signs of any revival in the stock and share market. The prices in December were i in almost all cases lower than those ruling in January while London Stock Exchange quotations of last week showed that much less money was being given for banking and financial companies’ shares there than was being realised for them in New Zealand and Australia. It seems evident that a new level of values must obtain in the near future, and that prices will be based on the dividends that can be paid by the companies and not on expectations of bonus issues, distribution of reserves, and fresh issues of shares which may be sold at handsome premiums. At present the return from the investment of money in banking and financial companies’ scrip is comparatively high. Three years ago it was rare that any bank shares yielded over 5 per cent. I Ta-day the only shares that do not show a return of over 6 per cent, are those of the Bank of New Zealand and the National Bank of New Zealand. The Commercial Bank of Australia used to sell at over 30/-, which gave the investor a little less than 5 per cent. The latest sales at 15/6 would return almost 10 per cent., assuming the rate of divident to remain at fifteen per cent. This is unlikely, but it gives an indication of how speculators and investors view the present state of the market, and the prospect of little improvement in the near future. How severe has been the decline in prices a comparison of those ruling this month last j'ear and those accepted to-day will be make abundantly clear by the following figures:—

Just before Christmas, the prices on the London Stock Exchange showed a further fall from those quoted a fortnight earlier. Australasias were selling at £8 3/9; Union Bank of Australia at £7 13/9; Bank of New South Wales at £27 10/-; National Bank of New Zealand at £5 1/3; and Bank of New Zealand at £2 11/-.

Although the banks have suffered a decline that a few years ago was thought to be impossible the great pastoral ccompanies have suffered to an even greater extent. A world-wide institution like Dalgetys, the greatest woolbrokers in the world, reduced its dividend from 17 per cent, to 10 per cent, per annum. Profits were on a much smaller scale, and they are unlikely to be higher for some time. Shares fell from £l2 15/- to exactly half that sum, £6 7/6, but later recovered to £6 12/6. Goldsbrough Morts, another leading Australian firm whose scrip is more freely dealt in in New Zealand than that of any similar company, fell from 36/6 to 17/11. New Zealand and River Plate suffered in a comparatively slight degree, shares standing at 28/- at the close of the year against 30/9 at the beginning of January. One of the very few stocks which remained constant throughout the year was Perpetual Trustees. They realised 68/- in the early months, and exactly the same amount just before the holidays. The same remark applies to Trustees and Executors Company’s shares.

The insurance companies of New Zealand have long attained a reputation outside the land that gave them birth. There are no companies of this kind in Australia with the same amount of wealth and world-wide ramifications as have the two leading New Zealand insurance companies. Notwithstanding the prevalent depression and the consequent restriction of trade, New Zealand Insurance shares have declined very little. They sold down to 40/9 after seeing 44/6 early in the year. South British showed a drop of 7/6 on the best price given some months ago. Standards show the heaviest fall of any in this section. Offers to sell at 48/are not accepted. These shares were at three guineas a year ago. Nationals are down from 15/- to 14/- during the year. This company had a fairly successful year. As showing the difference between New Zealand and Australia, the shares in the Queensland, one of the wealthiest of Australian companies, fell from 66/- to 48/-. This company reduced its dividend from 12§ per cent, to 10 per cent., and made a loss on its underwriting business.

A section of the industrial class of stocks that was severely hit was that connected with meat freezing. Few companies, if any. escaped heavy losses which, came on top of those of last year. It is evident that the local companies have been giving too much for meat, and this, following the slump in wool, skins, hides and tallow has caused them losses which, had they not built up reserves, they could not have been able to meet. All coal shares, which were looked on as fairly good property this time last year, fell promptly when the Australian coal strike was declared off. The competition from overseas, price cutting to get trade and keep the mines going, increased use of oil and electricity, are factors tending to affect the coal business. Research promises to help the industry by utilising the by products but the initiation of new works is always costly and difficult. The outlook is promising if labour troubles are absent. I The section which showed the greatest decline was that in which the Australian industrial stocks are placed. All the shares of these companies, though they are financially very sound, were heavily discounted in Stock Exchange values. Shares which had risen rapidly in the last twenty years, like Colonial Sugar, reaching at one time £65, fell to £3O. The value of this script depends entirely on the protection the Federal Government gives It. That is not yet decided. British Tobaccos is another similar company. Heavy customs duties, primage duties and increased income tax have eaten into the profits of this concern. Henry Jones Co-op., which operates in Australia, South Africa, and New Zealand, has felt competition from companies subsidised by the Government. The shares fell from 30/6 to 18/6. It is difficult to foresee the future of

the market, but it seems that speculators cannot hope for any great improvement until financial conditions become better. The signs of that change will not be looked for on the Stock Exchange but in the lessened ranks of the unemployed.

Bank of Adelaide . 5 1930. 7 6 8 1929. 2 6 Aus. of Com. 18 6 1 9 3 Australasia 9 7 6 12 12 0 Com. of Aus.. orddinary .. .. 15 9 5 9 Com. of Australia, prefs. 6 6 0 7 0 0 Com. of Sydney .. 17 10 0 23 15 0 English, Scottish and Australian 4 19 0 7 3 0 Nat. of Australasia (£10 paid) 11 7 6 16 0 0 Nat. of Australasia (£5 paid) 5 5 0 7 19 0 Nat. of N.Z. 5 5 0 6 13 6 New South Wales . 27 15 0 40 17 6 New Zealand 2 9 6 2 18 6 Union 9 0 0 13 1 6