FINANCE AND INVESTMENT
By CUSTOS
EXERCISING its traditional role of looking ahead of events, the Stock Exchange celebrated VJ-Day well in advance by hoisting prices of rubber and tin shares, Far Eastern bank shares, Chinese and even Japanese bonds. Some of the buying at the beginning of this week, especially in rubber shares, can only be described as undiscriminat- ing and optimistic, and I shall not be surprised to see a reaction, followed after an interval by much more selective inquiry. Although it is true that the rubber companies now stand a good chance of recovering their estates in reasonably good condition, or at least much less damaged than had seemed likely, the process of re- habilitation, with labour and materials in short supply, is bound to be slow. In the case of tin, producers are already emphasising the high cost of new dredges, and urging the need for Government financial aid.
In the other and more important sections of the market every- thing depends, as I have stressed in these notes, on the Govern- ment's taxation policy and its intentions in the matter of giving " fair compensation " to the expropriated owners of capital in the industries scheduled for nationalisation. The King's Speech fulfils most forecasts in giving a high priority in the nationalisation pro- gramme to the Bank of England and the coal mines. It also con- tains more than a hint of the likelihood of a National Investment Board, which will direct the flow of new capital into industry. It cannot be said, however, that the Speech provides any solid basis for a rational view of the industrial share market beyond suggesting that estimates of profits and dividends should be tempered with caution.
LARGE KAFFIR FLOTATION The launching of the West Driefontein Gold Mining Company, with an initial issued capital of 3,900,000 shares of 'cis. each, marks an important step in the return to normal methods of financing the development of the South African gold mining industry. With a due sense of the importance of preserving London as the main source of Kaffir financing, the British Treasury has given its per- mission for shareholders on the Londonregister of West Witwaters- rand Areas to exercise their valuable rights of subscribing to 2,070,039 of the new West Driefontein shares at par.. Already deal- ings -have begun on the London Stock Exchange, as well as in Johannesburg, and the price of 45s. gives a striking indication of the value of the subscription rights to West Wits. shareholders, and also of the market view of the potentialities of the property. At 45s. the market valuation of West Driefontein is something close to £9,000,000.
Rich values have been disclosed by boreholes, and in his survey of the position which accompanies the prospectus the consulting engineer to New Consolidated Gold Fields expresses the opinion that the potentialities of the mine are well established. He also points out, however, that the mine must be considered a deep level proposition, with physical characteristics which must be ex- pected to make the cost of shaft-sinking somewhat high. At this stage the shares are obviously a speculation, but of their kind they are a promising one.
A. C. COSSOR RESULTS
As had been expected, A.C.. Cossor, the mato manufacturers, have announced higher profits, and an increased dividend for the year to March 31. Net profit, struck after charging taxation, has risen from L1o2,6o6 to £134,430, and is quite apart from a' sum of £45,000 which has accrued to the company from dividends from Sterling Cables, Limited, for the three years to March 31, 1945. The raising of the dividend from to per cent., tax free, to 121 per cent., tax free, represents a conservative distribution of the available earnings, the board having been able to reduce the goodwill item from £200,000 to £roo,000. What shareholders are now anxious to learn is the company's scheme for raising fresh capital for ex- pansion in conjunction with important American interests. The long-terra possibilities are obviously very considerable in a com- pany of this kind, but appear to me to be fairly well discounted at the current level of 4os. for the 5s. shares. On the I21 per cent. tax free dividend the yield is only lust over 3 per cent., less tax.
Previous page
