WELLINGTON NEWS

Hokitika Guardian, 4 January 1929, Page 2

WELLINGTON NEWS

STOCK EXCHANGE INESTMENTS. [Special To The Guardian.] WELLINGTON, January 2. For two or three years past those with money to invest have gone more and more into Stock Exchange securities and in the United States they speak of tin’s new body as the great outside public. This is the inevitable result of the post-war conditions. The basic industries have offered very little scope for investment, but the newer industris have. In the United Kingdom artificial silk, gramophones, and radios have attracted capital, and it is the same in other countries, but it is only true to a very limited extent in respect of New Zealand and Australia. Here investment in Stock Exchange securities has been most marked, but here investors have favoured shares of financial companies such as banks, insurance, mortgage concerns, and only a few industries companies have received attention, the chief of these being breweries. But investors have not bought shares entirely for income, but rather for capital appreciation, and during the past year some of the investors have done remarkably well. Very few bank shares have shown any rise in value, but there are some exceptions. Towards the end of 1927 Bank of New South Wales shares were quoted at £44 ss, and just before the exchanges closed for the Christmas vacation they were selling at £SO ss, a rise ’of £6. If an investor had purchased say 100 shares a year ago and sold out the other day he would have cleared £6OO, besides getting the quarterly dividends paid out by the bank. During the same period Union Bank shares rose from £l4 to £ls 6s; Bank of New Zealand from 58s,’ 3d to 61s 6d,. and English, Scottish, and Australian Bank from £7 11s to £8 16s. The return to the investors in bank shares on the annual dividend paid amounts to, in most cases, less than 5 per cent, so that it is not for dividend return, but for capital appreciation that most shares are purchased. A year ago New Zealand insurance shares were purchased at 38s 6d, now they stand at 46s Gd, a rise of 8s; South British Insurance 64s 6d are also 8s higher than they were a year ago, and Standard Insurance at 64s appreciated about 4s. Twelve months ago Dalgety and Co’s shares were selling at £l3 10s, now they are worth £ls ss, a rise of 355; Goldsbrough, Mort, and Co’s shares at 51s 6d have appreciated 4s. National Mortgage shares have risen from 70s-to 88s; New Zealand and River Plate from 27s to 32s 6d, and New Zealand Loan and Mercantile ordinary stocks, which were quoted at £93 10s a year ago are now in demand at £llß. New Zealand Breweries’ shares have appreciated very consider- , ably for the twelve months being quoted at 44s 6d and just before Christmas they wero selling at 57s 6d, a jrise of 13s, and it is difficult to know what has caused the advance. But n'ot all shares have advanced for shipping, coal, woollen, gas, timber and frozen meat shares have not, except in a few cases, shown any appreciation. So far it is capital appreciation that lias attracted investors, but as the business of the Stock Exchanges increases “bulls” and “bears” are hound to make their appearance, and they have already invaded the Stock Exchanges of Melbourne and Sydney. It is stated that dealers in shares have taken to jobbing in scrip of what is termed “the group of securities.” Such operations have been greatly facilitated by the plan of selling forward with the right of delivery at, say the end of six. weeks. In the case of bank shares such “spec” selling of shares is unlawful in Australia and is not permitted by the Stock Exchange, but there is no such bar against other shares. This jobbing in shares has occasioned uneasiness because of the fluctuation in pTices, and the question is being seriously asked whether in view of this development something cannot be done to safeguard the investor against speculation of the kind. Checks are not imposed by other exchanges, certainly not by London or New York. Those experienced in stock share dealing know that any inflation of stocks brought about by “ bull ” operators generally ends in heavy losses to. investors who have rushed in to partici-ple-in the boom. The only safeguard at such times is a strong “ bear ” party, which is sufficiently powerful to in,pose restraint upon inflationary tactics. The problem 'of keeping •nther “bulls” or “bears” in check is most difficult of solution, for it is almost impossible to limit free dealing in any group of shares.