WELLINGTON NEWS

Hokitika Guardian, 27 July 1925, Page 1

WELLINGTON NEWS

GILT-EDGED .SECURITIES.

(Special to “Guardian”.)

WELLINGTON, July 27. To refer to a security as being

"gilt-edged” is to indicate that, it is sound and safe: security that one eotiid place under the pillow and make sure that the next morning it will still be as valuable as it was the day before, and that the return will not have diminished. Usually it is Government Stocks and Ronds that are favoured with the name of “ gilt-edged ” and rightly so for such securities have tighacking of the credit of the State, -•ecurities regarded as such by investors yield only a small rate of interest, hut one can make certain of receiving that interest regularly. A glance ai a Stock Exchange share list issued in Ihc Dominion will show that New Zealand investors place quite a number of shares in the gilt-edged class, and a few of them take precedence of Government securities. The shares of the Colonial Sugar Refining Co wth a nominal or face vaule ol C2O, are in demand at 1'72 at which price the return calculated on the last dividend of 11 ’ per cent, .is only Cl 1- lid per cent., while the iieturn from the TV per cent. Inscribed Stocks is C! 12s Kid per cent, on the flat interest rate or Cl Ills Id per cent, if redemption he included. and the--1,I 1 , per cents are the tax free issues. There are special reasons why the Colonial Sugar Go’s shares are so eagerly sought after by investors. This company earns very large profits and every now and again the aecumulatioii of reserves enables the company to either capitalise a portion of the reserve or distribute it by wav of bonus. There are. however, quite a number of other shares that rank as gill-edged in the opinion of investors. The entire group of bank shares is so classed. Thus tit current prices and last dividends the Rank ol Australasia yields Cl i)s (id per cent.; the Comim-i-cial Rank ordinary .-haregive a return of ~ ! I-- Id, National Rank of New Zealand Co os id; Rank of New South Wales C I I (is (id ; Rank of New Zealand Cl l.'Ss lid: Union Rank ol Australia Co (Is Sd per cent. Investors have discovered that better return- can he obtained irom the shares of Australian banks and money is being inve-ied in them, thus the shares of Hie National Raid; of Australasia at eurr. lit pric"- \ield slightly more than ii per cent.; Royal Rank of Australasia share yield Co is Sd, and Rank of Victoria share Co tits 10s. Insurance

-hare give a smaller return than d<> hanks. Inn that is owing lo the Kiel that in the prices of insurance shares investors anticipate the capitalisation of reserves or some equally important benefit. The New Zealand Insnraiice Co. is capitalising a portion of its reserves. Shares in the National Insurance Co., at current prices yield Cl 2s 0d per cent. New Zealand share- yield Cl os 0d per cent and South Rriti.-li In-iiiance C.’i Ids Sd per cent. Tim Dear Meat bo. is om- of ill" best 111 all 1 concerns and its shales have always stood very high in the e-iimation of investors. At current prices Dear Meat share yield Cl l:t- lid per cent. On -hipping shar.-s mveslors expect a bigger return than from hank and insuram-.

-hares because there are obviously greater ii-k.-. Seamen and liienu-ii. cook- and -tew aid- -nlt'er Irom mood-, and liv going mi strike or going slow.

or insisting on ham and eggs lor breakfast may very easily reduce shipping prolits. At current primes lluddarlT’aikcr ordinary -hares yield Co Ri- dd per cent and the preference -Imres Co 17s ltd per i-.'iit. Ailelaise Steamship shares return C 7 2s lUd per cent, Devonporl Steam Kerry shares

ii per rent, ami 7 per cent, preference -Imres Co Id- tid per i lit. boat siairci, livers look for substantial return because the risk- are greater than in •Jlipping, and with the exti’ti-inii "I the electric power schemes the con-mnp-I ion lII’ coal inn-I. -brink. Taupiri Dual oi'il shares yield L’S ds sd per < cut . Waina ( 'ollieries > |»'r cent, and

Westport Coal share Cd 7,s (Id per cent Study of the share market is alway inieresting to 'those who can see tin points and note the trend. KEDKMI-TIO.X OK DEBT.

The llopayiaeut nl‘ ili.- 1 1 ix il l it- !><•!>! !!iil introduced Itv lliv (lovermucnt iOlio id' those Hill!:.' I.eliex e gesture* I hat mii't he'expecled prior In the geli-ci-al election. Ii ivlaloslo ‘-'l. t.t j(Hl.t>l *0 ut' ilctit. ami would automatically apply to 11 ** xv Ilians. There is in he paid int.i a separate account io ho culled ,tho Public Del 1 1 Kepaynient Account, a sum eipial to l |! s per i.uil oi toe total aimin at ot the ptthlie (leht . mist a it. line at the etui of ih o previous linaiicia! year, together with an additional amomit of the puhlic dcht redeemed to that date. There is also to lie paid into the account -‘it per cent ol the total amount of the puhlic debt repaid or redeemed as at the end ol tile previous financial year, together with an amount eipial to df per cent ol the amount so repaid during the ellri'elil. financial year lor the period elapsing between the date ol rejiaymeui and the end lit the current iiiuuieial year. Any money paid into the aeeount may lie applied iii the purchase and redemption at or lie fore maturity ol New Zealand (oivernmeni securities, hut .such [lurehases are apparently only to he made when the securities are at a discount. Tlic scheme is certainly j-ootl as I'ar a- it goes. tor it is in accord with (lie science nl public iinance. hut il d.ocs n>i. go lar enough. li should lie enacted that the year's >urplus, whatever ii may lie, should automatically he applied to the redemption ~}• :;s is the rule in (ireat Hritain. if this were done, each year vvouhi provide for its own finance, and tic result would he that the .Minister oi Finance, instead of seeking to secure a surplus, will rather reduce taxation. and thus the taxpayers would iiciieiit. Those who think that tuh scheme will wipe out the debt must remember that \ve annually borrow or.OAO.tXiOi The debt must increase rather than decrease.