FINANCIAL OUTLOOK

Sun (Auckland), Volume IV, Issue 1007, 25 June 1930, Page 13

FINANCIAL OUTLOOK

WEEK ON ’CHANGE PRICES VERY ERRATIC By “Noon Call” With State and Commonwealth loans offered to the public on a basis which allows a return of approximately 6 per cent., and a little over in the majority of cases, it is only natural that investors should want an immediate return of slightly more than 5 to 6 per cent, from securities outside the range of the gilt-edge class. Such has been the case in Australia in recent weeks and the reaction has been felt in New Zealand, where the share market has shown an appreciable weakening. The New Zealand share market has registered a decidedly easier tone during the past ten days and the general tendency of prices has been to drop to lower levels, practically the only exception being shares in concerns operating solely in New Zealand, with solid business connections. The Australian Market The Australian market appears unable to break free of mists of depression which have enfolded it for several months. A few weeks ago it seemed that confidence was returning following the improvement in the wool position and the better outlook for the wheatgrowers, and that the Stock Exchange investor was starting to anticipate an improvement all round by buying sound stocks in .concerns so wrapped up in the affairs of the country that the value of their shares would appreciate in proportion to tho returning prosperity of the people. Today, although there are definite signs that the worst is over, and that, with economy as its watchword, Australia should start very shortly on a new era of industrial and pastoral development, the pessimists are as active as ever and the reaction is being felt in New Zealand. Although quite prepared to admit that all is not as it should be in financial and commercial circles, and prepared also to believe the world must set itself out to accept lower price levels generally, the writer cannot sc© occasion for pessimism; it seems rather that it should be an occasion for extreme satisfaction all round that the people generally, and the governments in particular, evince a, keen desire to face facts and re-establish finances on a sound basis. If there were a tendency to ignore absolutely the “writing on tho wall” there would be reason for gloom in respect to the future of both New Zealand and Australia.. The balance sheet of the Bank of New Zealand, published this week, indicated very clearly that soundly managed concerns were not suffering from the present depression of prices to the extent the most pessimistic would have us believe. Advances were certainly shown at a comparatively high figure, but the change in deposit totals was almost negligible. Profits reached a new high level, being a shade over double those of 1920. Position Overseas Although industry still waits for the Bank of England discount rate to drop another half per cent., and may, in face of present gold movements, wait some little time yet, tho general trend of interest levels overseas continues in the right direction. The reduction of the Federal Reserve Bank of New York rate to 2 A per cent. announced last week was a move in the right direction. The reduction of the Bank of England rate to 2 5 per cent. would bring about a situation which has not occurred for 21 years. The accepted minimum of 2 per cent, was last 111 operation in 1897. From the New Zealand viewpoint one of the principal market announcements of the week has been that in respect to the firmer tone in butter prices, with every indication of them holding. At the moment New Zealand exporters are sending as much of the exportable surplus as possible to Canada in order to have it there prior to the application of the tariff in October, and indications are that big quantities of the new season’s make will be sent into Canada right up till the last moment. This will help to stabilise the position and to ease the burden of supplies on the Home market. Another factor in favour of the New Zealand dairyman is the disappointing production in the Northern Hemisphere this season, production falling short of expectations. The outlook for wool and meat could he much worse and, viewed all round, there is much to be thankful for in the outlook. On the New Zealand Stock Exchange With the market as it is, fluctuating up and down every few weeks, the position for the man in the street in making a selection of investments is rather difficult. There is the consolation, however, that it has long been regarded as good practice to buy when the majority are selling, for it is then that the greatest bargains are to be picked up. There are several shares on the New Zealand Exchange share list which should be good buying at the moment and tho average investor would be very unwise, unless in possession of reliable inside information, to go outside the range of ready sellers. However much the market may fluctuate, the signs all point to a recovery to higher levels than those ruling at the moment. The delay may be considerable, but, nevertheless, many stocks must reach higher prices. OATS DEPRESSED GRAIN IN CANTERBURY Press Association CHRISTCHURCH, Tuesday. In the Canterbury grain market oats remain depressed, and values have recorded no change. A grade Gartons have been offered at 3s 9d for prompt delivery, but; the truer quotation today is 3s 9£-d, f.0.b., s.i. For spread delivery it is 3s lid to 4s, f.0.b., s.i. B grade is not being offered in much quantity, and the quotation for prompt delivery is 3s Sd to 3s Sid, and for spread 3s 9d to 3s 9id. Chaff remains firm at late rates and is quoted up to £7 a ton, f.0.b., s.i., equivalent to £5 5s to £5 10s a ton on trucks. For July-August-Septem-ber delivery the quotation is a little higher, with “free” wheat practically all purchased. There is not much speculation in this market. Fowl wheat is still very firm at 6s, f.0.b., s.i., and the demand is quite good. The position in the potato market is that one and all are watching to see which directions prices will take. The discrepancy between the f.0.b., s.i., values and those to farmers still exists, and if it is true, as reported, that potatoes are hard to get from the growers, who are inclined to hold, it would seem to indicate a firming rather than an easing tendency at an early date. Today the price to farmers is £4 a ton on trucks, and it is stated that a little above that figure lias been paid. The Auckland market is still weak. The Katoa is loading at present for Auckland. She has on board 2,455 sacks from Timaru, and is expected to take between 3,000 and 4.000 from Lyttelton. Quotations today are £4 I7s 6d, f.0.b., s.i., for prompt delivery, £5 5s for July, and £5 15s for July-August-September. With regard to the latter quotation, potatoes for July-August-September delivery were bought todav at £5 12s 6d. The onion market is still very weak, and quotations remain at about £3 a. ton on trucks.