COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume C, Issue 29513, 15 May 1961, Page 16

COMMERCIAL Review Of Week’s Stock Exchange Transactions

IBv Our CammercuU Editor] In a week of reduced turnovers in Australia and New Zealand, price movements were irregular last week. Christchurch turnover was the lowest for a five-day week since February, the reduction being confined to Australian shares. Twenty-three New Zealand companies’ shares, notes or rights were firmer and 22 were weaker at the close. Fifteen overseas-domiciled issues were firmer and eight were weaker. Rises and falls were jvell distributed through the quotation lists, both in Australia and New Zealand. Retailers and wholesalers, for instance, were fairly evenly divided. In some cases two issues of the one company showed divergent trends: Wright Stephenson convertible debentures rose 3d while the shares fell 6d.

The Australian market Armed noticeably on Friday, and New Zealand prices tor Australian shares responded accordingly. The market had been erratice earlier in the week but reacted favourably to the official announcement on Thursday on the credit squeeze. The Federal Treasurer (Mr Holt) said that although the credit squeeze would be continued, the Government would not go ahead with its plan for a permanent tax on borrowings by firms by way of debentures and notes. The situation in New Zealand is almost the reverse of the Australian picture. Both economies have suffered from inflation and from balance of payments difficulties, but the snalady was diagnosed earlier in Australia. The treatment prescribed there was unpleasant, but beneflcial results are by now apparent. The New Zealand patient was less willing to be told he was unwell and is still reluctant to submit to the comparatively mild restrictions prescribed for him. The symptoms of malaise in the New Zealand economy are still very apparent to anyone who cares to look for them. Overseas reserves are little above their midFebruary seasonal low, and are only £4m above the comparable 1958 level. The failure of the reserves to show their usual seasonal recovery this year reinforces the Government’s decision to apply for membership of the I.M.F. The ease with which Australia has been able to increase her borrowing from the fund this year will be a good debating point when the application is discussed in the House. GilfU Firmer Government stock showed a steadier trend last week

than at any other time since the end of January, yields on most issues fell slightly, but one or two yields fell quite sharply. The increased buying support evident last week was probably due in some degree to the approaching maturity of several loans—the first of them in a month’s time. Except for these holders who want 14-year-stock, purchases in the market offer more attractive terms than those of the conversion offer. As well as the slightly higher yield, investors can save tax by buying a 3 per cent, or 32 per cent, stock which will give them a substantial capital gain. No Fireworks The Standard Insurance meeting at Dunedin on Monday failed to provide the fireworks that many shareholders expected. As one shareholder put it, the directors “killed the company and now they throw the body at our feet and invite us to the funeral.” Most of the shareholders at the meeting appeared to take the view that accusations and recriminations would not bring the body to life and the best they could hope for was that they would recover something from the realisation of the deceased’s assets. The question on the tip of every tongue was whether a call was to be made on the shares. This question was put to the directors, but was not answered directly. It was apparent that the directors were hoping to avoid making a call, realising that it would bring further hardship to many shareholders. The impression gained from the meeting was that a call may be avoided, or at least minimised, provided the company can find time to liquidate favourably all its assets, and those of the H. and S. group range from investments in Hong Kong to an ancient trading vessel, the value of which is very difficult to estimate. As with most commercial assets, they will be sold to best advan-, tage only if the liquidator’s hand is not forced by the need to raise cash in a hurry. Uncalled Liability The failure of the company has drawn attention to the shares in other companies which have uncalled liabilities. “Many years ago.” says Jobson’s “Investment Digest."

“some companies called their capital up in such a manner to leave something in reserve in the event of some unforeseen calamity. It was common among banks, of which the A.N.Z., Bank of Adelaide, Commercial of Sydney and Bank of N.S.W. have amounts which can be called up.” The Bank of N.S.W. is meticulous in the registering of new' shareholders; discreet inquiries are made as to the finan-j cial standing of the pur-; chaser before a transfer is' approved and before the; transfer is approved an officer of the bank ensures that! the transferee could meet a call of £2O a share. Jobson's names the following prominent. Australian companies outside the banking field which still have an uncalled liability: Australian Gas Light (A shares). Elder Smith, Permanent Trustee and Perpetual Trustee. The National Mortgage and Agency Co’s., A shares, paid to 4s, have an uncalled liability of 16s a share. "In view of what has happened to the New Zealand company, consideration might well be given to extinguishing the liability where it still exists,” Jobson's suggests. Turnoxer Details Details of transactions on the Christchurch Stock Exchange last week were as follows: Government stock £17,500 (compared with £4500 the week before) local bodies and company stock and debentures £3OOO (£2200); preference 900 (9635): banks 2305 (2249); breweries 3400 (5450); building societies 150 (nil); frozen meat 4540 (2141); gas nil (3037); insurance 2550 (1716); loan and agency 150 (1200); timber 100 (100); woollens 1210 (4724); miscel-i laneous Australian 12.7811 (23.047); miscellaneous N.Z.| 14.006 (12.989); unlisted 1500 (411); total 43.592 (66.699). Yields to maturity on Government stock traded in Christchurch last week were as follows:—32 per cent., 1962. £4 Ils 5d per cent; 4J per cent., 1962, £4 19s lid per cent.; 3 per cent., 1961- £5 0s 9d per cent.; 42 per cent, 1962-63. £5 Is lid per cent.: 3 per cent.. 1962- £5 3s 7d per cent.; 4i per cent.. 1965, £5 Is per cent.: 3 per cent., 1964-66. £5 0s lid per cent.; 4 5-8 per cent., 1965-66, £5 0s 8d per cent.