COMPANY NOTES
By
CUSTOS
THE reduction in the American bank rates had more lasting effect on the zt. London stock markets than on Wall Street. After the initial resPonse, when the industrial index moved up 2+ per cent., Wall Street reacted but Throgmorton Street held on to a good deal of its gains. The gilt-edged market was buoyed up on the thought that a re- duction in the 7 per cent. Bank rate had been at any rate brought nearer. Most gilt-edged stocks, as I write, were about point higher. The. new 6 per cent. Nottingham loan went to 2 pre- mium, and the 'stags' had a field day. If this is the turning point in interest rates it will be the last chance to jump into the gilt-edged market on a bargain basis. This remark applies also to recent debenture issues (such as VICKERS 6 per cent. now 1 premium on the issue price of 96s.) and to the depressed preference shares of which there are legion. I will call attentionto only four: SHELL 7 per cent. preference at 22s. to yield 6.2 per cent., UNILEVER 7 per cent. first preference at 21s. 9d. to yield 6.3 per cent, UNITED DOMINIONS TRUST 41 per cent. first preference at 13s. 3d. to yield 6.55 per cent., and CONSOLIDATED ZINC 41 per cent. at 13s. to yield 6.65 per cent. A more speculative share is ASSOCIATED BRITISH PICTURE 6 per cent. second preference at 13s. to yield 9.2 per cent. As this company's equity has been rising quietly on the grounds that its ITV interests are making enough money to offset the decline in cinema earnings the preference issue should soon command a higher investment status.
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The equity share markets responded to the American monetary news as sharply as gilt-edged but with far less reason. The industrial index is now twelve points above its November 'low' of 159 and sooner or later will probably test its 'low' again. Store shares have been specially favoured in spite of the fact that retail sales fell quite sharply in October (influenza and the weather being responsible) and the outlook for Christmas shopping is not considered so bright. The highest yield offered in the store share market is on NEW DAY FURNISHING, which has just re- ported a fall of about 50 per cent. in net profits due to the recession in its H.P. business. At 9s. 3d. the 2s. shares yield over 101 per cent. on the 50 per cent. dividend which was barely covered by earnings. if the consumer trades are to be favoured I prefer brewery shares at the moment in view of the increase in beer consumption and the development of the trade in canned beer' BASS were outstanding this week; a dividend Yici, of about 71 per cent, was clearly attracting buyers A yield of 8 per cent. on the equity of a busint monopoly must be very unusual, but it can v't obtained from the 5s. shares of FINANCIAL NEWS; 18s. 6d., paying a dividend of- 32+ per cent. and earning 751 per cent. This company,publishes n"., only financial daily, the Financial Times, and al the business community appears well satisfies with it there is not much likelihood of an oell°51'0', tion paper being started. The company also 0, St. Clement's Press and publishes the Investors Chronicle, the Banker and the Practitioner. 11., Investors' Chronicle has rivals and as it t17, lowered its appeal for weekend investment reaLrA ing by being published on Thursdays it is boll to run into increasing competition. The comPall' also owns a half-share in the successful Ectufif mist. It is now building an expensive new ofP near St. Paul's (to finance which it raised a deb ture loan) and this will improve the look of thj fixed assets which at present have a large del (£11 million) of good will. At the beginning of t year a controlling interest in the Financial Ned was acquired by S. Pearson Industries, one the group of companies controlled by the Pearso , ' family trust. This should ensure the continuant' of a liberal editorial policy.
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The `bulls' and 'bears' of Wall Street seen' d the moment to be in equal strength, but it o" satisfactory to note that the Canadian market h() grounded,and that the once popular stocks le tumbled 40 per cent, to 50 per cent. are now 5 cent. or 10 per cent. off the bottom. A recessi'io in Canada- is in progress and it is too early average on industrial and commodity sitar' Alberta oil production has been cut back shut and only Saskatchewan companies (CENTRAL Rto for example) are doing well. The new 140, pipe-line stocks are safer than the oils, but c31,/ tion must be exercised over TRANS-CANADA 151 until its export problem has been settled. 101. COAST TRANSMISSION is now 'on flow' and ItS ternal markets, served by B. c. POWER and WO,' GAS, are developing fast. It is also exporting fo over the border. Its 1958 earnings are estimated around $2.50 per share so that at $26 Canada o shares are not unreasonably valued.
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