REFLECTIONS ON CHANGE

Sun (Auckland), Volume II, Issue 605, 6 March 1929, Page 10

REFLECTIONS ON CHANGE

GENERAL TREND UPWARD DEPENDENCE ON RESERVES By "Noun Call.” Despite the fact that business on ’Change is suffering a slight reaction after the exceptionally heavy trading of the first six weeks of the current year, all the better-class securities meet with a very steady demand, with no signs of an easing in the market. \UJ.TH an abundance of surplus capi- * ’ tai seeking a profitable outlet, and the paucity of avenues for profitable, yet safe investment, holders of bank and insurance scrip show little inclTnation to sell, and the market, generally, is very firm with a continued tendency toward even lower interest levels. This trend is noticeable throughout the list, the market for all tested securities being very firm, with holders, in the majority of instances, looking more to future imbursements by way of distributions of surplus profits, than to immediate dividend payments. Whether this is not being overdone is becoming a very questionable point.

Experience in the Past The tendency to believe that reserves j must ultimately find their way to j shareholders cannot be laid down as a j general rule. Such a policy has j brought disaster on innumerable firms j in the past decade and history will be ' repeated if there is a general recur- j ranee of similar tactics during the j present boom period. Because a firm lias made provision j lor the future by way of reserves does j i 1 ot necessarily mean that holders of ! the scrip are to receive a big hand-out in addition to the Lisual dividend pay- j ment at an early date. It does mean, however, that the firm will be in a good position to meet a period of depression that hits all sections of industry periodically. At the moment it seems that there is a tendency to over-value the scrip in many well-managed concerns merely because times are good, and depleted reserves are being built up. With the share market on almost boom heights, in many instances, selection of profitable securities becomes increasingly difficult. Rises in Banking Group Further rises were recorded in the bunking section over the week. Australians u f Commerce show an advance of Is 6d. Nationals of New Zealand hardened to the extent of 2s. The ordinaries of National Bank of ’Asia are Is 9d firmer at £l9 10s. Insurance shares appear to be firmly held by investors satisfied to hold on until other avenues offering the same degree of security, with greater prospects of return, open up. At the moment such avenues are hard to locate. Holders of loan and agency scrip are in much the same position, and business in the section as a result is restricted to within a very small compass. Coals continue to attract the more speculative element, Hikurangis coming into greater prominence over the past day or so, although, as yet, the market has not found a steady level following the slump from the firm levels preceding the inrush of water to the mine. This scrip is worth watching from the speculator’s point of view. A wide range of miscellaneous securities was handled over the week, investors apparently going further afield with a view to selecting scrip in concerns which are participating in the general industrial improvement and have bright prospects of returning higher dividends in the near future. Return on Investment Below is a summary of sales made on New Zealand ’Changes during the week ended March 5, giving the approximate return on investment based on the latest dividend. In the case of Government and other redeemable debentures the return includes redemption. The first column gives the price at which the latest sale was made:

Latest Appro Retur £ s. d. £ s. d. BANKS— Aust. of Com 1 16 6 4 7 8 1 8 11 Nat. of N.Z 7 7 0 4 15 19 10 0 Ditto (con.) . . . . 9 12 6 5 3 3 3 Union of Aust. INSURANCE— 15 S 6 o National 0 16 4 12 4 New Zealand . . 2 7 Mercantile National 1 11 0 LOAN AND AGENCY — Goldsbrough, Mort, . 2 12 6 5 14 3 Ini ted Building N.Z. Guarantee Corp. 0 9 1 COAL— Grey Valley 2 1 6 Pukemiro 2 17 o Renown ft 17 —♦ Ditto (pref.) .. .. 0 2 11 — GAS— Auckland (ord.) 1 4 n 6 5 10 Ditto (con.) .. .. ft IS 6 11 6 Gisborne ft 10 9 15 Christchurch (ord.) . 1 6 0 13 6 3 <» , Napier SHIPPING— 10 5 0 7 16 1 Devonport Steam . . 1 1 li 6 4 4 Ditto (con.) .. .. P. & O. (def. 0 7 0 S 0 3 14 0 stock) 3 4 9 BREWERIES— 2 IS ft 3 8 10 Staples 2 4 0 4 10 11 Tooths 2 15 9 WOOLLENS — Wellington (ord.) .. MISCELLANEOUS — Aust. Iron and 7 7 6 6 15 9 Steel (pref.) .. . . 1 0 L0 7 4 0 British 'Tobacco 2 8 10 1 10 6 12 3 Colonial Sugar .. .. 60 0 ft 4 3 4 Dominion Rubber . . 1 17 6 Dunlop Rubber Electrolytic Zinc 1 8 2 5 6 6 6 (ord.) Farmers’ Trading (B 1 15 ° pref.) Fullers’ Pictures 0 13 1 0 6 8 15 7 Hayward’s Pictures. l 0 8 14 11 Holden’s Motors Kempthorne Prosser 1 S 9 N.Z. Drug Milne and Choyce 3 15 6 D O (deb. stock) .. .. 1 6 6 6 0 N.Z. Farmers’ Fert. N.Z. Paper Mills .. 0 IS 6 11 6 N.Z. Sugar of Milk. N.Z. Refrigerating 1 3 0 6 10 3 ft 16 6 6 1 Ditto (con.) . . . . ft 7 8 6 10 Sanfords. Ltd. (ord.) 0 18 0 7 15 Ditto (pref.) .. .. ft 19 Sharland and Co. . . 1 0 6 6 16 Taranaki Oils . . Victoria Nyanza 0 5 Sugar 1 0 Wilsons Cement MlNINGt — Kildare ft 3 0 — Kurala Ivanipar Tin 0 lo — Mount Lyell .. .. 2 4 0 — Ohinemuri Waihi DEBENTURES — Auck. Har. Bd., 0 13 1935, 5 p.c 98 0 0 o 7 11 1961. 5g p.c 103 10 0 5 11 1 N.Z. Breweries .. . . N.Z. Farmers’ Co-op. 1 6 4 7 11 1931. 6i p.c N.Z. War Loan, 193S, 91 0 0 7 16 10 99 17 6 4 1C 5 Ditto. 1933. 5X p.c. 101 10 0 5 1 6 N.Z. Ins. Stk,, 1933, 100 n 0 4 If 0 Ditto, 1936, 5i p.c. ' Wellington City, 101 12 6 5 4 2 ; 1932, 6 p.c 101 10 0 5 S 2 tNo attempt is made to work out returns on profit-givin crip. ales of which are merely inc uded in this column for record purposes.