WELLINGTON NEWS

Hokitika Guardian, 4 January 1928, Page 4

WELLINGTON NEWS

INDUSTRIAL SHARES. (Special to “ Guardian ”.) WELLINGTON, Dec. 31. While the shares of investment companies, such as banks and insurance, and also Government stocks and bonds and the debentures of local bodies have been in active demand throughout the past year, industrial shares, that is shares of trading and manufacturing companies have been very much neglected, and there is good reason for this. At one time shares in gas undertakings were regarded with very great favour, but in recent years they have not had the same attraction for investors. The competition of electricity, which has displaced gas for lighting purposes, and is now invading domestic life, for electric cookers and heaters and irons are now becoming quite common. There is really no wonder that gas shares are not favoured now. Still gas companies in the larger centres continue to earn substantial profits and pav regular dividends. Of course the price of coal delivered at the gas works plays an important part in the cost of gas to consumers, and unfortunately most of oiir gas companies are obliged to have their supplies of coal carted from the seaboard to the Works, and it is this repeated handling that adds to the cost. In Germany a scheme has developed for supplying the greater part of Germany with gas from the Ruhr. Valley. Coal is abundant and cheap in the Ruhr, and the coal is more cheaply turned into gas at the source of supply. I' rozen meat shares hare been depressed for the past two or three years, and nothing different could have been expected in view of the fact that with few exceptions most of the meat companies have incurred heavy losses. It has been recognised that there were too many of such concerns in the Dominion especially in the North Island. Force of circumstances is now bringing about adjustments and several of the weaker companies have gone out of existence, thus enlarging the field of operations for those remaining. A big turn-over is essential to a meat company, and this big turn-over has not been possible with the feverish competition that has existed in the past. The outlook for the meat trade seems to be a good deal better than it was because of tbo meat war in the Argentine having ended. This dispute, which began in 1925, lias been kept up for about two years, resulting in big losses to tbe export trade of most countries, for tbe Argentine meat interests were dumping chilled beef on the Kmithfield market and selling same at below the cost of production. It fs now probable that consumers will have to pay more for their meat supplies, and New Zealand should benefit from this.

Shipping shares met with a spasmodic demand throughout the year, because of tbe fear of labour troubles, and this feeling has been warranted, for we know that a. very serious dispute very nearly developed in Australia a few weeks ago. On the whole ITuddart Darker anti Union shares have held their own, but I’. and O, stock have risen bv about £25 in tbe year, and at the latter price the return to the investor is equal to only 3$ per cent per annum. P. and 0. stocks are regarded as gilt-edged and there is always a quick turn-over in them. Furthermore shipping troubles have not been known in Britain for the past seven or eight years anil a better understanding exists between employer and employed. Shares in coal companies at one time during the year promised to see a revival, but the demand soon slackened off. It is a question whether there are not too many coal companies in the Dominion, at all events tbe costs of production are high, and coal cannot compete successfully with electricity. The demand for coal Is contracting in tunny directions, especially in the shipping industry, where the motor-ship is displacing tbe steamer dependent upon coal. Tbe shares of woollen companies have also been somewhat slow, and here again it seems that tbe country is burdened with too many such ventures, ft is estimated that the capacity of the existing woollen mills is equal to supplying the requirements of double the present population, and of necessity there is cut-throat competition. Ic seems inevitable that sooner or later tbe units in this industry or some of them will have to amalgamate and go in for mass production so as to reduce costs. Timber companies’ shares have been very depressed, but there is some hope that tbe higher Customs duties may cause some revival in trade. But much will depend upon building operations in 1928. and that in turn will depend upon tbe national savings and the volume of credit available. Tt is believed that in the sawmilling industry there is too much plant and machinery working for tbe limited requirements of tbe country.