STOCK EXCHANGE

Timaru Herald, Volume CLIII, Issue 22475, 9 January 1943, Page 4

STOCK EXCHANGE

Investment Market Reviewed Buyers Predominate The position on the Wellington Stock Exchange at the end of 1942 is very different from that ruling 12 months ago (says “The Dominion”). At the end of 1941 the market was hesitant, due very largely to the menace of Japanese aggression. In the early months of 1942. when the Japanese tide swept ever onward, the market w*as a falling one, with a very small turnover. An additional depressing factor was drastic action on the pan of the Commonwealth Government, which temporarily robbed the market of the support which had formerly come from Australian exchanges. ' Government loans were the only class for which, in these early months, there was a strong demand. For them there was always a keen inquiry, with ven’ few r sellers in the market, though prices rose steadily till the interest yield to most purchasers of short-dated loans w T as a shade over 3 per cent, and for longer maturing issues it w r as approximately £3 3 - per cent. As the months 'went by the gradual, but steady improvement in the war situation as a whole, and especially in the South Pacific, had an invigorating effect on the investment market. This was also enhanced by the Australian Federal Government permitting share prices to revert to values ruling in mid-September, 1941. Returning Confidence The returning confidence was shown in the marked success of the first Liberty Loan of £15,000.000. which was over-subscribed by £2.000,000. The second Liberty Loan was., like the first, over-subscribed. Bank deposits were at an exceptionally high level, generally exceeding £90.000.000. while funds in savings banks were also at unusually high levels. This surplus of spending power, once confidence was fully restored, manifested itself in an everwidening demand for income-produc-ing investments. Sellers, however, largely continued to stand off the market, preferring to hold their investments rather than release them. This restricted the turnover, which at no time during the year was heavy on the Wellington exchange, or on the Christchurch or Dunedin exchanges. On the Auckland exchange, however, the turnover was occasionally very heavy. In the closing weeks of the year, following the British Eighth Army's smashing victory over Rommel at El Alamein. the Allied landings in French North Africa, the Australian victories in Papua, and the great Russian offensives, the demand for Government loans fell away. Almost all other classes of stocks, however, were in keen demand, inquiries being spread over a wider field than in recent years by investors in a search of suitable investments rendered more difficult by the scarcity of sellers. Position Abroad In Australia the Federal Government’s restrictions on trading on the Stock Exchange practically confined business there to Government and municipal securities for some months. Following Allied successes in the South Pacific there was a more buoy ar* spirit which was evidenced by the upward adjustments in the ceiling prices fixed by the Federal Government. Turnover w 7 as small, however, as there were few sellers even at the latest highest ceiling prices. On the London and New York Stock Exchanges the position has been similar to that in New Zealand. Early in 1942 both markets were falling ones, with* a small turnover, and this continued for the first half of the year while the Japanese went from success to success. Following on the battles of the Coral Sea and Midway Island, however, there was a distinct improvement, both in prices and turnover. Since Then the markets have grown steadily stronger. At times there have been setbacks following small booms, but these have done nothing to impair the steadily growing confidence of investors. Of the Axis Powers, the only reports recently to hand of Stock Exchange reactions to the war come from Japan, where it was reported a few- weeks ago that the markets had slumped badly under a flood of selling orders.