INVESTMENT NOTES
By CUSTOS
THE equity share markets have been ignoring the holiday season and advancing to new high levels, checked only momentarily by the end of the account on Tuesday. At the moment of writing the Financial Times index has reached a new high level which is 64 per cent. above the low of Feb- ruary, 1958. Confidence in steel shares is growing. helped partly by the Gallup poll on a Tory victory and partly by confidence also in Mr. Gaitskell's re- mark about 'full and fair compensation' for steel shareholders. The steel share market is certainly an interesting speculation and I would not dis- suade investors from having a fling at it even at present prices. Bullishness has spread even into shipping and shipbuilding shares. This, I think, is misplaced. There is no visible sign of any improvement in the shipping situation. The com- petition which the once fashionable nuclear-power companies are now experiencing should not, I think, prevent an interest being taken in GENERAL ELECTRIC at the present price of 38s. to yield 5.2 per cent. on the 10 per cent. dividend now covered 1.6 times. I hear encouraging news of the improve- ment in management efficiency which this com- pany is now experiencing. It has had two bad years but the turn may now be coming.
Stores Shares
It will be a great relief to the market when the Harrods take-over is accomplished. The directors have now declared an interim dividend at the rate of 10 per cent. against 5 per cent. a year ago on the strength of 'a satisfactory increase in the total net profits for the half-year ending August I.' Harrods shares, however, did not react strongly to this news, for the market is thoroughly tired of the take-over rumpus. I am assuming now that Mr. Fraser will win the day, having inciedged his offer by a further 6s. 8d. in cash for each ordinary share. Until this offer was made the Debenhams and House of Fraser offers were so close that there was little in it, except the well- known preference of the directors and staff for the Debenhams merger. which suggests that there has been some 'inside' favouritism at work. When victory is secured Mr. Fraser will, no doubt, disclose his plans, and on this will depend the price of his own shares. At the moment buyers of Harrods must sell a bear of House of Fraser shaYes to protect their position.
Oil Shares
There has been a fair revival in oil shares which does not appear justified so far by any improve- ment in the statistical position of the industry. In the US domestic demand rose by about 64 per cent. in the first half of the year and the forecast is for an average 5 per cent. increase for the whole year. But crude oil output was 11 per cent. up in the first six months in the US, 9.3 per cent. up in the Middle East and 15 per cent. up in Venezuela as compared with the first six months of 1958. However, the American companies have now cut back their refinery runs, there has been a sharp reduction in the Texas 'allowable' output and some crude oil prices have been lowered. The Chase Manhattan Bank review states that 'there are plausible reasons for thinking that the industry has turned a corner and will reach a good statisti- cal position before the year end.' So there is hope. Technical reasons can be advanced for the re- covery in the London market. •fhe CANADIAN EAGLE-SHELL merger is nearing its end and there has been selling of uovAt_ uu rot by British holders of Canadian Eagle in order to buy Shell for the higher income. which is a 4.3 per cent. return at 152s. BORMAH OIL is now ex the 100 per cent. bonus and at 49s. yields 4.6 per cent. on the equivalent dividend of Is. 41-d. tax free. It seems reasonable to go for a slight increase in this dividend but the Scotch directors of Burmah Oil are not notable for their generosity to shareholders. Shell still seems to me the more attractive purchase----on a dull day in the market.
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