WELLINGTON NEWS

Hokitika Guardian, 17 March 1931, Page 2

WELLINGTON NEWS

INSIGHT OF CAPITAL,

(Special Correspondent.)

WELLINGTON

March 13,

■ Capital is very sensitive, it in promptly affected by dtpressiiug factors si.iu.l us tjuickly responds to favourable conditions. At base capital is more optimistic than pessimistic and this must, be so for capital js at all times seeking an outlet. It is cosmopolitan. It recognises no nationality, no frontier. no creed and no borders. Gfve capital the least encouragement and it flows in that direction. Capital it may h,. said, gives expression to its sentiments ma.inly through the Stock Exchanges,'■ and therefore the London and New York' Stock Exchanges, but particularly the former,, may be taken as the barometers of ..capital. It is idle to say that capital is not influenced by political events, indeed politics are now so closely interwoven with economics that it would be a great blunder not to give due weight to political events. Last week the Lon,l; n Stock Exchange showed some buoyancy which was due to a number of incidents.

There is no doubt that the FrancoItalian naval agreement released a certain strain, at all events it reduces expenditure on naval and means , a saving to the Treasuries of the nations concerned. But above and beyond this lias been the settlement of the Indian trouble and the lifting of the boycott of British goods, this latter will have, a direct and immediate 'beneficial effect on British trade, and though we have had nothing to do with the .Indian problem we will benefit indirectly by the settlement, Tile cotton Industry of Lancashire has been under a cloud for a good many months; the industrialists of that' centre have rationalised, reduced wages, improved machinery, and some have bankrupted, and now ther e is a prospect of industrial activity. The mill hands of Lancashire are consumers of butter and cheese and meat and they need woollen clothing. "With steady work and regular wages they will help to consume more of these products, some of which no doubt will be of New Zealand origin. The above favourable instances are political m their nature, but there is a favourable economic factor, for it is now stated that for the first time since July 1929, the “Economists’” index number of commodity prices at the end of February shows an . upward movement, and the “Economist” remarks: — “Though the percentage of increase is onlv one-third of one per cent., it is at least satisfactory that the prolonged downward sweep appears to momentarily' arrested.” The rise in commodity pric-CR is very minute, but it is a rise, and capital has not hesitated to seize upon it as a good omen of the immediate future. Commodity' prices have been bumping at the bottom for months and now seem to lw moving upwards. Of courne, not all commodities are so affected, but a good many nt’o, auiong them being wool the prices foy which fit the London sales which opened on Tuesday, must have caused a wave of eptisurge over sheepowjiej'S. Capital Jhrough the Stock Exchange has shown appreciation for th e ae favour* 'movements and prices of stocks and shares ascended,

New York linis had its spectacular flutter but lias since settled down to normal business. The Stock Exchanges of Australia and New Zealand have responded to a minor degree. It is impossible to give any details of movements on Australian exchanges, but in New Zealand there have been sharp advances in three banks share's. The s'hares of the Bank of N.S.W. have risen from £26 2-> 6d to £27 in the course of a few days, and yet a fortnight ago the highest bid was £25 with the quarterly dividend thrown in. The heavy drop was due to the directors standing to their legal right to pay dividends ill Australasian currency.

The Union Bank of Australia sold as'low as £6 12s 6d and at times of writing buyers are offering £7 18s and have not the slightest hopes of filling their requirements. The Bank of Australasia have risen from £8 15s to £9 7s 6d and unprocurable at the latter figure which means that the bidding must go higher. It is hard to discern the reason for this sudden upward trend for the ecomonjo conditions of Australia are still in a haze, while the New Zealand conditions will need a lot of hard work and determination to move. Capital apparently sees through the haze, at all events it is apparent that capital is taking a longterm view.