WELLINGTON NEWS

Hokitika Guardian, 19 February 1930, Page 7

WELLINGTON NEWS

STOCK EXCHANGE BOOM

(Special Correspondent.)

WELLINGTON. Feb. 17. The .sudden revival ol Stock Exchange dealing is one of the remark able phenomenon of the new year, ant. the shareholders of the Dominion an. to he congratulated on the subtit manner in which they have workec up their business to the boom level. ■Bank shares have been the counter, upon which speculation has beci based, and it is speculation for thost who are buying shares in the presen. boom are not -cmying for a long-term lock-up investment but for speculation in the hope that prices will recover and again sell at the prices ruling in August and 'September last. The difference between values now and then is very wide. For instance Eank of New South Wales shares were sold at about £52 in the earlier period and now Sydney and Melbourne are unloading at about £4l, and a few weeks ago the shares were lower. To take another example: Colonial Sugar shares sold in September last at about £57 10s, while now they are [procurable .at about £44. If share values recover and again touch the level ruling, say in September last, those who are buying in would make a substantial profit on resale,, and investors generally in tile Dominion appear to be of the opinion that values will rise to their old level and in this view they seem to have the backing of the brokers. There can be no doubt that the share market wil. recover, indeed it has already recovered to some extent, but that recovery is due to the competition among the speculators themselves. It it doubtful, however whether we shall sec' the extreme values current in September last year again- in operation. New r Zealand speculators have concluded that shares have reached bedrock, but can they be sure of that. There is a good deal of the merino sheep about investors for, they all. do the same thing together or .one '.after tile other and this mass gesture must not be, misunderstood and must be heavily • discounted. -The fundamental theory actuating speculators in Stock Exchange securities is the belief -that: the present depression affecting Australia and . New Zealand, but . particularly the former,'will be of short duration and will be all over -in a few* months. Those who held such views and are acting on their opinions are likely to receive a rude shock. The depression has not yet reached - the peak, or that point when the swing of. the pendulum naturally moves the other way. The fact that the peak lias not been reached,' at least in Australia, is to be seen ill a recent statement by Judge Bee by, president of the Australian Arbitration Court who recently issued a warning that in viowof the fall in prices of wool and other primary produce, general reconstruction in Australia was inevitable. Unions must realise that lower wages were almost certain ,and he suggested that smaller profits would probably follow. Everything pointed to the fact, that the present, depression was not temporary but the result of post-war. That short statement is pregnant with a good deal of significance, and requires to be pondered over bv the ultra optimistic speculators on the StockExchanges and the business community generally. The depression which is not yet fully effective will not lift .in few months nor will thq inflated share values, of a few months back be seen again for some years to come. Depletion is not a pleasant job, for it means loping off over-growth, pinching, out excresences, rooting out this, that and the other as being costly and superfluous, and reducing in this and and that direction, all of which will be painful. Surgical operations are always painful, but when the necessity arises they have to be performed, and so it must be realised that deflation with all it implies is inevitable. We cannot go on as at present, but must clean up and get off til© mark again. In. the course of four or five months when exports of produce are petering out and there' is nothing coming in, and obligations to .be met the stringency will make us all view things f-roui a new angle, aiid particularly values, whether those values apply to Stook Exchange securities, real estate, commodities in general and labour. Judge Beehy no doubt from his vantage poinfj sees this coming and warns his special clientelle—the workers—of the pending changes. When wages , are lowered and profits reduced by what planner of magio can share values be forced' up. New Zealand speculators have boomed shares and bank shares ( in particular to their own disadvantage, and will realise that sooner or latgr. In the meanwhile it seems that speculators have shown an unwonted eagerness to l< hold the baby f QI Melbourne and Sydney. ,