THE FINANCIAL OUTLOOK

Sun (Auckland), Volume IV, Issue 959, 30 April 1930, Page 11

THE FINANCIAL OUTLOOK

TREND IN RIGHT DIRECTION MOVEMENTS ON ’CHANGE By ‘"Noon Call." The financial position at the moment is full of interest and the general trend is such that even the best informed and keenest students of market movements are often at a loss to forecast near future reactions. From the point of view of the New Zealand producer the general trend over the past week has been in the right direction. Confirmatory reports have been received from Bradford to the effect that there is a generally brighter tone in the wool market, and that, Although producers cannot look for high prices again except under exceptional circumstances, and must use every effort to cut down costs of production, there is a stronger demand for wool both from English and Continental manufacturers. Present indications are that any near-future movements of prices will be to higher levels. The frozen meat market is still rather depressed and latest cables from Smitlifield report a trend toward lower, rather than higher, price levels. Best New Zealand lamb is quoted at a slight decline on last week; at S*d. the top price compares with 8 5-8 d a month ago, lOd two months ago, and 11 l-8d three months ago. Supplies on the London market are reported to be heavy and it is this that is largely responsible for the lower prices. IMPROVED BUTTER MARKET The position in respect to butter is considerably brighter and, although those in the best position to know do not consider the present a good time to make forecasts with any degree of certainty., it seems that, for the moment at least, there is a decidedly stronger demand and certain speculative Interests hold the opinion that prices are likely to go higher. This is evidenced by the fact that offers have been made during the past day or so to purchase New Zealand finest butter for May-June shipment on a basis of Is 2d a lb, f.o.b. This price works out at over 140 s in terms of London market quotations. The general view is that the market will tend to fluctuate round present levels as there are still heavy stocks held in London and in sight. INVESTMENT MARKET FURTHER DEPRESSED The investment market is in the throes of a further fit of depression with the general trend of prices for anything outside gilt edge Government securities toward low r er levels. The principal cause of the trouble is. of course, the unsatisfactory state of affairs in Australia, and indications are that it will be some time yet before things are righted over there. Commencing on the Australian position in a recent review, Messrs. J. B. Were and Son, the well-known Melbourne sharebrokers, express the opinion that even lower prices may prevail over the next two or three months, as there is a great shortage of money for investment. Payment of incometax, and the making of other necessary seasonal payments, combined with the usual winter dullness and slackness of trade, will all tend to depress further the already weakened market, which, even without assistance from a predominance of sellers, would probably continue to settle down under its own weight. The lower prices for stocks and shares are causing some banking institutions to ask for more cover or a reduction of overdraft liability, and forced selling is accentuating the position. All this, however, does not necessarily mean that the present is an inopportune time to invest. There are many stocks which, even though the market may fluctuate slightly over the next month or so, are very attractive buying for anyone prepared to take a long view. Below is a summary of the principal sales made on the New Zealand Exchanges during the first two days of the present week, giving the return on investment based on the latest dividend. It can be seen that the return, even for shares in many concerns which have a long record of very sound management, is very attractive in several instances:—

In the case of stocks, such as Union Bank, the dividend has already been reduced, and there is every likelihood of an increase once times improve. With the exception of New Zealand Guarantee Corporation and North Auckland Farmers’ Co-operative, which are comparatively new concerns, all the companies quoted above have long records of satisfactory progress showing every prospect of appreciation in the value in the price of their shares when general prices improve. Mount Lyells are suffering from a further slump following advice from London to the effect that metal prices are easier.

Approx. La test Return Pri< £100. £ d. £ d. Com. Bank of Aust. Bank of New Zea1 1 6 6 19 6 land 2 0 5 Union Bank Nat. Bank of A’sia 11 18 0 5 5 0 (con.) 7 9 0 6 14 2 N.Z. Guarantee Coi'p. North Auck. Farmers’ 0 7 11 8 8 5 Co-op (pref.) 0 8 9 13 14 3 Queensland Insurance 2 8 0 5 4 2 Auckland Gas .. .. Christchurch Gas 1 3 9 6 14 9 (con.) 0 12 6 1 6 Timaru Gas 1 0 5 6 British Tobacco 0 0 6 0 0 Mount Lyell .. .. N.Z. Farmers' Ferti1 S 3 14 3 2 lisers 0 IS 9 S 10 8