“MAY GO LOWER”

Timaru Herald, Volume CXLV, Issue 21110, 9 August 1938, Page 7

“MAY GO LOWER”

DOMINION STOCKS IN LONDON Criticism of Labour Policy Dangers of Increased Spending Views of “ Investors’ Chronicle ” Uunrn Press Association— By Kiectnc Telegraph—copyright (Received August 8, 6.30 p.m.) LONDON, August 7 New Zealand credit is still subject to criticism in London. “The Investors' Chronicle” considers that investors are faced with a new situation as a result of the political aims of the New Zealand Government. Higher expenditure Is much less elastic than national Income, and bondholders’ worn- is that the safety point does not depend on periods of posperity, but on depression. From this viewpoint the safety point has already been passed. New Zealand's record sugests that if faced with a crisis she would pay her debts out of social services, but, while the problem remains, a period of low prices and panicky markets Is unavoidable. Decline in Trade Surplus Moreover, the paper adds, legislation relating to working hours and wage rates is affecting costs, and the trade surplus is declining. The present rate of decline, £7,000,000 per annum, is demonstrably inadequate to meet debt services and other invisible charges. London funds have declined to about £25,000,000 sterling, which is sufficient to cover a moderate deficit for some time ahead, but the disquieting thing is that unless the present tendency is changed, New Zealand will no longer have a surplus in London at aIL High Domestic Expenditure The Government’s explanation that the trade deficit is merely temporary, and Is due to imports of capital goods does not Impress investors as much as the belief that It is due to excessive domestic expenditure. The question, “The Investors’ Chronicle” insists, is whether Mr Savage will have the courage to check the tendencies the Government has set in motion. Meanwhile New Zealand stocks may go lower, though, in the long run, it is most improbable that New Zealand will default. DULLNESS IN LONDON NERVOUSNESS CAUSED BY TENSION United Press Association—By Electric Telegraph-Copyright (Received August 8, 6.30 p.m.) LONDON August 7. The keynote of markets has been dullness rather than weakness. There has been some sign of political nervousness. especially on the part of Continental operators, who are rushing to gold, but most City operators do not expect the Russian-Japanese trouble to become explosive. Evidence is accumulating that Japan is not in an economic position to embark on a major war. The City is more concerned with the European situation. German activity Indicates tha* markets may have to stand up to some shocks in the next month or t,wo Dairy Produce The butter market is tending harder, despite holiday Idleness. Inquiry is confined mainly to fresh arrivals from New Zealand, and appears largely manipulative. Continentals are quiet, and stocks are increasing. Cheese is also firmer, despite the fact that New Zealand stocks are nearly double last year’s Apples have continued in good demand.