REFLECTIONS ON CHANGE

Sun (Auckland), Volume III, Issue 771, 18 September 1929, Page 10

REFLECTIONS ON CHANGE

N.Z. MARKETS REVIEWED WILL INTEREST RATES HARDEN? BY ".YOON CALL.” One of the outstanding features in financial circles over the week has undoubtedly been the announcement of the Dominion’s conversion loan proposals. That arrangements have already been made for the underwriting of the loan is yet another indication of the Dominion’s high standing on the London market. The terms are not so favourable to New Zealand as those under which the January conversion was made, but this was not expected. Conditions gn the London market have undergone a considerable change over the past six months. The January issue was made at an approximate cost to the country of £4 38s 2d per cent, with redemption included over the shortest period of 19 years. This rate, of course, does not take into consideration charges incident to the making of the conversion, or the slight increase in the public debt brought about by the increased cost of the loan. In the same way this week’s conversion must be regarded as costing the country slightly more that the £5 2s per cent, exclusive of redemption, the first glance would indicate. One of the big features working to creating a feeling of goodwill toward New Zealand loan proposals on the London market is the large percentage of loan money held by domestic borrowers indicating, in the opinion of overseas’ critics, faith in the Dominion’s future. In March of this year the percentage of public debt held in the Dominion was approximately 45 per cent, of the whole. The fact that this week’s conversion proposals indicate that approximately £5,000,000 of the amount maturing in November may be raised in the Dominion must give further weight to an already strong argument in favour of New Zealand. The effect of this borrowing within the Dominion is hard to indicate at the moment. In normuf times it would certainly point to a higher domestic interest rate within the very near future. The next 12 months are certainly going to be interesting, whatever happens, as it seems that there is little likelihood of New Zealand’s income equalling last year’s figure. The market for wool may improve, but there are other factors operating. At the moment the local market appears to offer, within limits, considerably better terms to local-body and Government borrowers than any to be obtained overseas. Sydney is offering £5 12s Cd per cent, over the counter at the moment, while the Commonwealth Government, as the cables indicated recently, has been called upon to issue Treasury notes to carry it over the next 12 months. On the New Zealand Market On the New Zealand Stock Exchange market, one of the principal movements of interest has been the more or less unexpected rise in New Zealand Breweries. Selling at under 85s a fortnight ago, and 86s 3d a week ago, these shares have met with a strong inquiry at up to 91s 3d during the past day or so. The debentures have hardened in sympathy. This market cannot be judged from ordinary standards and the only inference which can be drawn from the latest rise is that the speculative element is operating in the hope that a further distribution of surplus profits, in addition to the 15 per cent, dividend, will be made over the next five years. Judged by ordinary standards, the market would be regarded as too high at the moment. The banking and insurance sections are quiet, with the former group showing a slight easing tendency. Nationals of New Zealand have suffered the most easing to see sales at £6 17s, compared with sales at £ 6 19s at the time of the previous sale. With profits over the past two years not sufficient to meet present dividend rate requirements, even today’s selling price appears too high. New Zealand Guarantee Corporations show the greatest activity in the loan and agency group, the market firming in anticipation of the report and balance sheet due any day now recording a good year. The miscellaneous group is quiet. One of the most interesting balance sheets connected with this group published over the past month has been that of Beath and Company, Christchurch. This company has been able to record a further increase in net profits, and, apart from being able to pay the usual 10 per cent, dividend, lifted the amount of reserves and balance carried forward to £34,843, slightly over 25 per cent, of the paidup capital in the company. Net profits on last year’s trading amounted to approximately 14 per cent, of paid-up capital. Return on Investment Below is a summary of sales made on New Zealand ’Changes over the week ended September 17, giving the approximate return on investment based on the latest dividends: Latest Approx. Price. Return. £sd £ s d BANKS—

Aust. of Com 1 14 Com. of Aust 1 10 Eng., Scot. & Aust. 8 9 6 Nat. of N.Z 6 17 0 5 2 Nat. of ’Asia. 19 13 i 1 New South Wales. 52 0 0 4 16 2 New Zealand 3 Union of Aust. .. INSURANCE— 15 1 6 4 19 6 National 0 16 9 4 9 New Zealand .. .. 2 8 0 3 16 Queensland 3 2 9 3 19 South British .. .. 3 6 LOAN AND AGENCY— Farmers’ Auct. (B 6 3 15 pref. > 0 17 7 Goldsbrough, Mort. 0 6 10 N.Z. Guar. Corp. . 0 9 6 16 N.Z. Loan & Merc. COAL— 125 0 0 6 8 0 Grey Valley .. .. 3 9 5 Pukemiro .. .. . . 0 16 estport Westport - Stockton 1 14 9 G 9 6 (pref.) GAS— 0 4 6 — Auckland Ditto (con.) .. .. SHIPPING— 0 18 G 11 6 Devonport Steam . . 1 2 Hud dart-Parker Northern Steam 2 5 6 4 7 11 (con.) TIMBER— 0 6 9 S 5 11 Leyland-O’Brien BREWERIES— 1 11 G a 5 6 New* Zealand . . Staples MISCELLANEOUS— Amalgamated Wire2 13 6 4 13 less (14s paid) .. Aust. Iron and Steel 1 3 6 4 13 5 (pref.) British Tobacco 11 Cant. Freezing 5 1 Colonial Sugar 57 12 Electro. Zinc. . . . 1 17 Farmers’ Trading .. 11 Glenmore Brick Henry Jones 1 13 Holden’s Motors Milburn Lime . . N.Z. Farmers’ Co-op. 1 IS 0 (A pref.) 3 10 N.Z. Farm. Fert.. . N.Z. Refrig Ditto (con.) .. .. O 1 Quill. Morris .. .. Robinson Ice Cream 1 4 S / Sanford. Ltd. Taranaki Oils .. . V hittome Stevenson 2 8 Wilsons Cement .. Wairarapa Farm. 2 4 1 4 10 9 1 (pref,) , .. 0 16 Q — h