COMMODITY MARKETS AND PRICES.

Manawatu Standard, Volume LVII, Issue 218, 14 August 1937, Page 5

COMMODITY MARKETS AND PRICES.

SHARE INVESTMENT MARKET

(By “Penloo.”)

The Stock Exchanges keep busy with dealings mainly in Australian industrial shares. Tho shares of .a fair number of New Zealand companies receive attention, and now and again a speculative sale is recorded. By this is meant that some investor has abandoned the beaten track and has bought the shares of some company that is not in favour with tho great body of investors. This is speculation, for the investor is taking a longe range view, and believes that with tho improving economic conditions, tho shares in the neglected company stand a good chance of appreciating in value. This is not an uncommon practice, and in improv ing times it is apt to result satisfactorily. The breweries companies aTe most active for their trade shows great expansion. The position seems to be developing so that wo will have two large concerns, one with its head office in Wellington. and the other with its head office in Auckland. Both concerns have recently issued fresh shares to increase the capital in order to deal with the expanding trade. The New Zealand Insurance Company is one of our oldest concerns for it was started by a hardy and venturesome group of pioneers. The company has had its ups and downs and is to-day a strong concern with business ramifications in most parts of the world. In the past year the premium income amounted to £1.180.635, showing an increase of £89,066 over the previous year. The losses amounted to £705.054, an increase or £74,146 on the previous year. The ratio of losses to premium income was 59.54 per cent., against 57.61 per cent, last year. The company has, of course, another source of income, and that is from investments and is thus able to maintain the dividend at 10 per cent., besides making generous additions to the reserves. Our insurance companies operate in much the same way as do the English companies, which are, like British banks. exceptionally strong financially. British insurance companies endeavour to pay dividends out of earnings from investments and most of them do so. At one time there were six insurance companies in the Dominion and all had been formed with New Zealand capital. There were two in Auckland. as there still are, i South British and the New Zealand Insurance Company. one in Wellington, one in Christchurch and two in Dunedin. In course of time some have a sorbed by other companies. It seems that the early settlers were o nter W ls ' ing and venturesome for tliev formed many companies, most of which are still in active commission and doing well. Among other conccrnsthere were three banks started here—the Bank of New Zealand, formed m Auckland, and the National Banb and the Colonial Bank in Dimed . The latter went out of existence in 1895. having been absorbed by the Bank of New Zealand as provided in the banking legislation of that fateful night of June 30. 1894. • Australian companies show more vitality than most of the New //ealand concerns and manv of LYem ar paying big dividends. The &dy e rton Tramway Company has just paid 2U per cent. Many Australian companies are increasing their capital by. the issue of fresh shares which are spoken of as bonus shares, simply because existing shareholders get the tirst chance of subscribing for the shares on a ratio basis, and generally at a low figure. Thus one company recently announced a new issue ot shares on the basis of one new share for every three held, and the new shares were offered at par. while the market price of the shares is about 74s In this wav the new shares are a bonus to shareholders for they can sell their right to the new issue at a big premium. Many more Australian companies must issue new shares, tor the country is on tlie eve of an industrial boom, winch would be emphasised if the wool cheque in the new season turns out as large as it was in tlie last season.