BRITISH TRADE

Hokitika Guardian, 13 January 1932, Page 2

BRITISH TRADE

FORTNIGHTLY REVIEW. STOCK EXCHANGE MORE CHEERFUL. BOND SECTION AGAIN STRONG. (United Press Association. —By Electric Telegraph.—Copyright.) LONDON, January 9. During the first week of the New Year the Stock Exchange has displayed a' far more cheerful tone than has been apparent for some time past. A steady, improvement in all gilt-edgeos lias been followed by an upward movement of most of the other stocks, even German, Austrian and other European bonds, which recently had been very dull, 'showing striking recoveries. This must he attributed to the growing feeling of optimism regarding the prospects of satisfactory results achieved at Lausanne Conference. Indian Government stocks have been in g°° d request as a result. of the Government’s strong action, which has done much to restore the confidence of investors. One - of the biightest -sections of the market is Dominion -stocks, which mostly slmw appreciation. Australians Ufe especially in favour, With hatdening prices. New ZealatldSj bit the other hand, weakened dufiilg last month. It is suggested ih some quarters that this is due to sales by holders for reinvestment in Australians, which are still much cheaper than New Zealand stocks, so that such transactions are decidecDy profitable. PLEASING FACTORS. Among the factors contributing to the improved tone on the Stock Exchange are the comparative steadiness for sterling exchange, hopes of a not far-distant reduction in the Bank raire, and the -satisfactory balance-sheets of the “Big Five” banks, which show only a moderate decline in profits and are considerably better than was expected. A.s the “Daily Telegraph” remarks, “Foreign observers of ■ British financial affairs can hardly fail to be deeply impressed at the way our great 'banking institutions have weathered the difficulties of a period of unparalleled disturbance and anxiety.” The immediate result of these good balance sheets has been an • all round improvement in bank shares, and a much brighter tone among industrials.

- Another wonderful balance-sheet is that of the F. W. Wool worth Company, sixpenny bazaar proprietors, whose profits for the year have risen by £SOO,OQu to £4,211,000 enabling the distribution of a dividend equal to 63| per cent. ,

. Holders of shares in Australian companies received a- crumb of comfort iii the fact that Austrajiirn Pastoral Co., Ltd., has resumed payment of a dividend. They are hoping that other similar Companies will soon be able to follow this example, SHIPPING TRADE, The shipping trade unfortunately shows no signs of recovery and the annual returns analysed inv “Fair Play” are most depressing. A comparison of the values of the ordinary shares of the six leading companies, the Cairn Line, Cunard, FurnessWithy, Indo-China, Peninsular, and the- Royal Mail, show>s a depreciation of of leas th,an 77| per cent, compared with January 1, 1920. On that date the market , value of the shares was £50,975,675. To-day it is £11,462,580. “Fair Play” points out that in 1920 a large number of shipping companies came into existence and acquired steamers at fancy prices. Nearly all of these have disappeared, or are practically insolvent, as it has been impossible to earn sufficient' to meet the enormous depreciation which has taken place, and the difficulties of gome of the older companies have been caused by the high prices paid for ships in the period immediately following the war. IMPROVEMENT IN STERLING.

A writer in “Lloyd’s Bank Review'” takes a favourable view of the nrospeets for an improvement in sterling exchange. In. a lengthy analysis of the position he points out that it is important to realise that the pressure upon sterling, due to the transfer of capital from England, is both temporary and non-recurrent, for as suun as the foreign funds held in England fall to their lowest practicable limit this pressure will automatically cease. Sterling fell during the closing months of 1931 under the pressure of nonrecurrent forces, which by now should largely have spent themselves. In these circumstances it is. not unduly optimistic to look for a rally in sterling, at len*t to its natural level. Even such general deductions as these arc liable to be unset by unforeseen developments, both economic and political, and all this analysis seek* to establish hs that, judging from the data available in the Decemlier balance, probability favours an early, but limited, appreciation of the pound.