Finance Stock And Mining

Free Lance, Volume III, Issue 138, 21 February 1903, Page 24

Finance Stock And Mining

THE report, of the Standard Insurance Company, for the year ended 31st December, affords further proof that the past year was not unfavourable to underwriters. The Standard has been a steady dividend payer, the dividends in recent years bemg at the rate of 7£ per cent. In the report just issued, it is proposed to disburse a bonus of 2^ per cent., making a total distribution of 10 per cent, ' for the year. After payment of diyidend, there is available £6000 for strengthening the reserve and re-insuranoe reserve funds, writing off £2000 for depreciation in securities, and carrying forward £6644 to next year. The results are extremely satisfactory, and will materially enha/nce the market value of the shares. * * * The trade figures' of the polony for the past year reflect the extreme prosperity now being enjoyed throughout New Zealand. The exports for the year totalled £13,633,577, as against £12,881,424, an increase of £758,153. This exhibits a very satisfactory condition of affairs, although the expansion is to some extent due to enhanced values. There has been an extraordinary growth in the quantities of the staple products exported. Wool, frozen meat, butter, tallow, hemp, all show increased quantities. The high prices have been an enormousadvantage to the country, for they have* encouraged our farmers to increase production, and it is on increased production that we must rely. Prices, no doubt, will decline in many directions , that is inevitable in a fluctuating market, but., with the steady expansion in production, the fall in values will not cause any serious disturbance. * • • The imports for the past year totalled £11,323,480, as. against £11,816,457 in 1901, thus showing a decrease of £492,977, which i* not to be regretted, for it show s that we are not squandering money. The imports, however, are still vi excess of the safety level. To enable us to pay our way, the balance of trade. — that is, the excess of exports over imports—-should approximate to £3,250,000, for that is the amount that has to be paid away annually to foreign creditors. The excess of exports over imports last year was £2,310,097. or about a million short of the amount required. This deficiency will, of course, be made up. out of borrowed money. As borrowing tapers off, the imports will decline, and the balance of trade will thus adjust itself. The trade figures, for the past year are deoidedlv strong and favourable, and the outlook is for a continuance of the prosperity that we have so long enjoyed. * » • The issue of a loan for £1,250,000 during; the week, at 94£, came as a surprise to most people. It is about eighteen months since the last New Zealand loan was floated in London, and the minimum price on that occasion was 94, so that we are now obtaining 10s per cent, more, and to that extent our credit has improved. It is also a pleasing fact that, while New South "Wales and Queensland are in pressing want of money, neither finds the conditions favourable enough to venture uoon the market. It is doubtful whether any of the States of the Commonwealth could float a loan in London on the same favourable terms 1 as the New Zealand emission. * * • The Commonwealth has passed through a severe time in the disastrous drought, and the awful privations of the baokblock settlers are only now coming to light. The ravages and losses occasioned by the drought will be felt for some time, but it is doubtful whether we shall witness another financial crisis as in 1894. Australian credit has been severely attacked by the financial press of London, but the conditions are not. nearly as had as represented, and in any case judicious retrenchment in Government expenditure will greatly overcome the present difficulties. * ♦ » There is, of course, no information available as to the terms upon which the New Zealand loan is being floated. The underwriting and other charges and the interest concessions cannot be known for some time, hut, in any case, the loan ought to net us at least 91 per cent., which would make the interest for the period equal to about 3f per cent, per annum. The money or rather the greater part of it, is required for meeting commitments of one kind and another and further sums must be borrowed either locally or in London to

carry out the various Government schemes ot land purchase, advances to settlers, etc. The chief point about the issue. — and it is an important point — is that our ciedrt is unimpaired. Some little excitement has been caused by the pronounced advance in the market values of bank shares. In Auckland, Bank of New Zealand shares have advanced to 82s, and National Bank shares are quoted at 90s, and a sympathetic upward improvement is reported in the other chief centres. The announcement of fresh banking legislar tion during next session, has, no doubt, led to favourable conclusions being drawn, and there is also the patent fact that the banks are doing well. It is possible that the projected legislation may be in the direction of relieving the shareholders of the reserve liability, which would make the shares a splendid trustee investment. However, that there is some good reason for the advance is apparent, and, whatever it is, it is bound to leak out shortly. *■ * * But bank shares are not the only ones that are favourably affected. Insurance shares have firmed very considerably. South British and New Zearla'nd Insurance shaires are much higher than they were a few weeks ago. Meat shares are- in strong demand, with values showing a decided upward tend em cy. All the sound investment shares are in strong demand and very difficult to obtain, and this difficulty tends to enhance their value. * * ♦ The reason why the movement in shares is so noticeable now is that people have just settled down to business after the Christmas vacation, and every effort is being made to invest money to advantage. There is an enormous amount of idle money seeking investment, and the o\\ ners cannot be expected to feel content to let this money lie idle at the banks. The increased speculation is the natural result of a plethora of money, and it will spread over all forms of security. Many investors prefer the shares of stable ]oint stook companies, but others again prefer land, and it is the knowledge that there is so much money seeking investment that warrants the statement that land values have not reached their highest point. r * * * Broad acres, dependent upon the return from produce to fix their value, may have touched the top notch, but the same cannot be said for city and suburban property. So long a& there is a reasonable prospect of the increase in population, urban and suburban land must see higher values. From this point of view Wellington stands preeminent, and land in and about the Empire City is about the safest and most likely investment. ♦ ♦ ♦ The plethora of money also leads to the belief that mining will again receive attention. The record of the dredging industry for the past year has not been unfavourable , the wild-cat concerns have been pretty well weeded out and the mining boomers have had to seek fresh fields. The industry is now on a solid basis, and careful speculation in dredging shares will be niofitable Some few people recognise this, and are quietly buying into selected dredging ventures. There is plenty of money in the colony, and that is the keynote of the renewed activity in the share markets.