TRENDS OF INVESTMENT

Wanganui Chronicle, Volume 80, Issue 133, 7 June 1937, Page 8

TRENDS OF INVESTMENT

WHAT DOES THE FUTURE HOLD? The leading article in the current issue of the New Zealand Journal is concerned with “Trends in the Investment Market.” “When considering industrial stocks,” the writer states, “it must be remembered that while trade has ben more buoyant in this country during the past year, with most companies showing improved sales figures, costs have been steadily rising, and it is doubtful it net earning power will be any better. In many cases the reverse will be the position. New Zealand has had the advantage of wonderful prices this season lor her meat and wool, while the guaranteed price for dairy products has also circulated more money, but there will be a large deficit in the dairy account, and this will have to be paid for by the community as a whole. The rearmament programme of G.cat Britain will act as a stimulant as far as our exports are concerned, and the huge Government programmes locally for Public Works and housing will temporarily assist, the internal position, but when these artificial aids are withdrawn the outlook will not be so promising. “Lack of confidence has ben responsible for many investors placing their money on fixed deposit or restricting their holdings to gilt-edged investments. Another section, not content with the relatively small yield from these sources, has entered the Stock Exchange arena, not so much for tne immediate dividend return but in the hope that it will gain by capital increment. That, again, has been one of the causes of appreciation m values. In Great Britain, the growth of the Investment Trust movement, and particularly the operation of fixed trusts, has been responsible for competition in the securing of parcels of the more popular shares for their portfolios, ihis also must have had the effect of pushing up prices. “Taxation, too, must be considered when assessing share values. It is veryhigh here, and there seems little pros- ; pect of relief. In the case of large companies the State is a preferential partner, and under present conditoins takes most of the profits. Unfortunately, with some enterprises the Government has fixed prices and regulated production to such an extent that practically no return on capital can be earned. Just how far this policy will be extended remains to be seen. Altogether there are so many disturbing factors in evidence that it would be a rash man who would confidently predict what is to happen during the next year or so. Accountants who are called upon to advise clients can only study each investment on its merits, bearing in mind the poin s we have mentioned and the fact that our prosperity is not so much dependent on local conditions as by the state of the world at large. Cheap money is not an unmixed blessing, and it would perhaps be belter for everyone if the value of credit hardened and a greater measure of confidence was restored.”