UPWARD MOVE

Rotorua Morning Post, Volume 2, Issue 543, 29 May 1933, Page 7

UPWARD MOVE

in the south MONEY STATED TO BE • -MORE FREE THAN' BEFORE. LOWERING OF JRATES. It is confidently ariticipated hy many interested in the investment market in Christchurch th'at, as the result of a number of factors, there should shortly be a move away from the fixed deposits with the banks to property and industrial investment, with a resultant increase in stahility and- prosperity in Canterbury. This will, it is expefeted, be one of th'e results °of the lowering of the bank rate and the fixed deposit rates. iSeeing that the deposit rate is so low, many people now are beginning ' to look for other fields of investment which will give them a better return on their money, and already lawyers and land agents have reported a move in th'e property market, though prices are still low. The move so far is slow, and to some extent seasonal, hnt it is thought that it will be sure. In Stock Exchange circles a firm and steady demand for industrial shares: is reported, showing that people are now considering different mea.ns of investment. The banks themselves state that not sufficient time has elapsed to show the effect of the lower rate on fixed deposit accounts, and certainly so far there has not been any noticeable effect The effect should be more clearly discernible in two or three months. However, it will not worry the banks very much if there is a falling-off in their fixed deposits, as the money will he transferred to industry and real estate, which will mean. an advance toward the return of general prosperity. One man said to-day that h'e would not be surprised to see a glnt in the money market in the near future, and that real estate would be the first branch of business to profit. He held that many people still looked with distrust on industrial investments, and were not keen on Govsrnment debentures and such gilt-edged securities. They preferred to put th'eir money into land and buildings. He held that people considered that a non-perishable asset like property was preferred by people to something that might he worthless through unforeseen circumstances. The increase in the demand for 'good industrial stocks and shares has been very marked in the last few weeks, and, apparently, industrials are as sound as ever they have been. People are inquiring keenly after woollens, coal, gas, cement, paper, •ewery, and freezing company shares; and prices of these have all moved up. Austra'lian industrials have moved up in sympathy with New Zealand. There are indications, it is claimed, of a climb upward from hard times. An economist claimed that there were psychological factors operating to-day as well as financial, such as the lower deposit rate. Investors who were studying America's inflationa®/ policy probably realised, that if that country inflated, and higher prices resulted, other countries would have_ to follow suit, and therefore a rising market would result. People then realised that, with the- prospect of higher prices, it would b® a good idea to invest their money in industrial shares or property. Another faetor which might be- operating was the World Ecbnqmic Conference, which was giving ifipre -Jiope for the future than any gabli&fiiig previously held. The ratio of advances to deposits in the Dominion banking returns has been very h'igh for a long time, and has been causing those who wish to see money cireulate very serious. concern. The figure has been round about 85 peb cent. for the last few weeks. But in December last it was over 100 per cent., and during last year it hovered round 96 per cent. most of the. time. . On the last figures_ available — for the week ended April 17 — it was 84.17. There does not seem to he such a keen demand for Government securities on the Stock Exchange in New Zealand, the main reason being that parcels are affected hy the bonus stock that has been given to investors on conversion. Sellers are hampered in getting rid of parcels like £210 worth of Government debentures, when most buyers want even amounts.