N.Z. AFFAIRS

Hokitika Guardian, 18 December 1931, Page 6

N.Z. AFFAIRS

. MARKET FLUCTUATIONS. DUNEDIN BROKERS REVIEW DUNEDIN, Dec. 16. Financial conditions in New Zealand and in the wider international sphere were the subject of interesting comment to-day by the chairman, Mr Harman Reeves, at the annual meeting of the Dunedin Stock Exchange. “Never in the history of the Stock Exchanges of New Zealand have we passed through such trying times as those of the last twelve months,” said Mr Reeves. “Markets .for the best investment shares have fluctuated very seriously from time to time. The general trend has been downward, and the capital loss has been enormous. The fall in market price during the last two years of New Zealand and Australian Biyik shares quoted on the New Zealand Stock Exchanges represents a sum of over £43,000,000, while the fall in the market value of the shares in New Zealand companies must run into many millions.

EXCHANGE RATES. i “Searcey a month has passed without some startling and unexpected change taking place in the financial world. Early in the year ws had a sharp rise in exchange rates between New Zealand and Australia and London. For many years, the exchange rate between New Zealand and Australia stood at 5s per cent. Then it gradually increased until in January it jumped to £lB 12s 6d per cent., an txliorbitant rate, at which it stood until recently. There has in the last week or two, however, been a drop of £5 per cent., and we hope as Australian funds accumulate in London that the rates will further fall, 'l'lie rates between New Zealand and Australia are more or less governed by the rate ruling between London and Australia. INTERNATIONAL DEBTS

“In July share markets throughout the world were galvanised into temporary activity by the announcement by President Hoover that the United States would defer payments of interest on war loans due to that country for twelve months. The immediate activity on the New York and London Stock Exchanges was reflected on the Australian and New Zealand Stock Exchanges with a result that an improvement in prices took place in many of the better stocks. The markets, however, soon dropped back to their depressed state when it became evident that a twelve months moratorium was, alter -all, only putting off the evil day. However, the suggestion of the deferng of interest payments and the sharp rise on all Stock Exchanges throughout the world make it evident that the one and only remedy for the world depression is the complete cancellation of all, international war debts. ’I he dreadful conditions in the United States and the world generality will make it imperative that some such scheme must b® shortly adopted to restore the world to its former . prosperous condition.

“In September England went oli the gold standard, the effect being an advance in prices for .metals-with increasing activity; temporal* ly on the London Stock Exchange, but this activity was not long sustained. The London market has, however, since improved considerably- as a result of tlie recent British Elections, and- the improvement has been reflected in increased . conlidepce in .Australia and New Zealand securities. CONDITIONS IN DOMINION.

“Coming to conditions on New Zealand,” continued Mr Reeves, “the Government found itself a few months ago in such difficulties, and finances of the country in such a low state that a special Economic Committee was set up to examine the position. During the sitting of the Committee rumours were circulated that the Government contemplated a conversion scheme of ts existing loans by compulsory reduction oi interest rates such as had been carried out in Australia. This exchange, together with the Auckland and Wellington Stock Exchanges, made f a strong protest against any such proposal, as it was considered that a compulsory reduction of interest rates on existing loans would amount to repudiation, would be a breach of the honourable observation of the Dominion’s obligations, and would irreparably ruin our good name and credit locally, in Australia, and in Londpu. I am glad to say that no such proposal has been adopted, and that as a country olir reputation still stands high for honourable dealings and Government stocks are again gradually growing in favour in the market. We are being heavily taxed and increasingly taxed, but will pay rather than have it said that we repudiated our interest obligations.”