THE FINANCIAL MARKET

Sun (Auckland), Volume IV, Issue 1019, 9 July 1930, Page 11

THE FINANCIAL MARKET

INFLUENCING FACTORS REVIEWED POSITION ON ’CHANGE By “Noon Call” Except to those with their finger-tips right on the pulse of world financial trends, the investment market position becomes more and more baffling as the weeks of winter advance. Further falls have been recorded in the market for several of what were regarded as the soundest stocks, and the confidence of a big section of the investing public has been badly shaken. Great events cast their shadow behind as well as before, and, although more than six months have passed since Wall Street touched bottom -in last year’s slump, the secondary effects of that turbulent episode are still influencing business on every Stock Exchange in the world, states a late issue of the London “Economist.” At the time of the slump, and after, the popular idea, even in certain official circles, was that it was due to vicious technical conditions in which the Hatry disaster played a big part; today, the weight of informed opinion is coming more and more to the view that it was but one aspect of a far-reaching recession in world economic activity. Result Of World Trends The business conferences called by President Hoover during the crash, and the prosperity propaganda they put forth, was designed to cope merely with the psychological effects on industry of what was deemed to be a purely stock market reaction. On both sides of the Atlantic, however, economic observers are now accepting the view that the present setback in industrial activities is a major “cyclical” movement not peculiar to any one country. Its intensity is, happily, very much less than that of its predecessor, the depression of 3 920-21, although it has been heralded by the same phenomenon—rapidly falling commodity prices which have impoverished the raw material and foodstuff producers and slackened the wheels of industry in manufacturing countries. Tlic initial weapon against such a costly recession—cheap money—has been swiftly and courageously applied, but it is clear that the recovery will be gradual rather than dramatic. The realisation of this by those who follow financial trends closely, and the general lack oC uncertainty with respect to future trends by those who don’t, has abruptly halted the rise in investment market values, not only in London and New York, but also in New Zealand and Australia, where the results of past excesses have combined to add further bearing influences to the position.

In the face of existing conditions few care to forecast immediate trends or to offer advice with respect to the placing of investments. While there are many investments available on the New Zealand Stock Exchange share list, which must eventLially turn out very profitable holding for anyone who can afford to take a long view, it is difficult to point to any security and forecast for it a steady advance in price, free from temporary fluctuations. Over the past six weeks the New Zealand market has seen sound stocks, such as the Bank of New South Wales, the Commercial Bank

of Australia, Dalgety’s, British Tobacco’s, and many others, recover from what seemed bedrock levels, only to fall again. The reasons have not been hard to locate, nor have they, in the majority of instances, effected the intrinsic values of the securities concerned; nevertheless, the effect on the market has been unsettling, and the tendency has been to turn the marginal investor in sound industrials and financial shars, to Government stocks and bonds, which, although the return is not always attractive.y high, offer as near to safety as it is possible to get. When Governments start offering 6 per cent, and a little over, as is the case in Australia at the moment, it is only natural that other investment sections should suffer even more at a time such as the present. Although several falls have been recorded in the investment market over the past week, it is hard to see justification for the recesses being sustained in the majority of cases. There should be no reason for the investor who has selected wisely on the lower levels of the past few months before buying to lose any sleep. For those who are looking foj* profitable avenues in which to place a little surplus capital, it seems that they would be well advised to follow tlio course of general economic trends even more closely than usual, watching always for signs of increasing stability of commodity prices in the world’s principal markets. When investments are made, the wisest course is undoubtedly that which goes along the lines of selecting only from shares in companies which, apart from being well and conservatively managed, are providing goods and services in every-day demand from the community. WEEK’S INVESTMENTS Some of the more popular investments of the past week, showing the approximate return on the latest price based on the latest dividend, include the following: BANKS—

T latest Price. Return Com. of Australia . 1 1 2 1 9 Ditto (pref.) .. .. 6 12 6 6 0 9 National of N.Z. . 6 1 0 4 19 2 Nat. of Australasia 14 s 0 0 18 10 Ditto (con.) .. .. 7 0 0 7 2 10 New Zealand . . . 2 17 5 0 2 Union of Australia 11 1 j 0 5 G 3 INSURANCE— A.P.A 0 _ 0 0 10 National 0 14 k b 3 New Zealand .. .. 0 4 1 V South British . • .. 19 6 4 G 10 BREWERIES— N.Z. Breweries .. .. 2 10 1 5 19 10 P. Staples 2 G 0 5 7 G MISCELLANEOUS— British Tobacco 1 10 ? 0 11 Farmers’ Trading- . . 0 8 0 10 0 0 I-folden’s Motors 0 10 0 10 0 0 N.Z. Farmers’ Fert. 1 1 0 V 12 4 DEBENTURES— Auckland Gas, 1935, 6i per cent 102 0 0 6 0 s GOVERNMENT BONDS War Loan, 1933, 5& 99 “5 0 5 15 S