Investment Notes
By CUSTOS
To many people's amazement the equity share boom goes on without interruption in both London and New York. Curiously, the Financial Times index keeps following the Dow Jones index at about the 50. per cent. level. The only disagreeable feature is the outbreak of specula- tive buying on the merest rumours. For example, GENERAL ACCIDENT has risen from 123s. to 140s 6d., and EAGLE STAR from 109s. 9d. to 1I8s. 9d. on the rumour of a merger between the two companies, which has been indignantly denied by both managements. Again, there was a sharp jump in HOVIS-MCDOUGALL to I9s. from 16s. 6d. on the unfounded rumour of a take-over and the introduction of a new dehy- drated food marketing. The brewery market is kept in constant turmoil through take-over talk. Here there is something more substantial, as the mergers and take-overs in this industry are by no means complete. But it behoves the investor to tread warily in this jungle. As long as he keeps to good stocks at reasonable prices he
need not hurry out of this bull movement. Apart from the coming entry of the trustees as soon as the Trustee Bill is passed, there is the possibility of the trade unions entering the market. The Board of Trade has been asked to sanction the formation of a trade union unit trust. which intends to hold 20 per cent. to 25 per cent. in gilt-edged stocks and the balance in equities. The total investing power of the trade unions is said to be £60 million.
Gold Shares There has been a sharp fall in the gold market on the departure of South Africa from the Com- monwealth, but the selling came from the Cape, not from London where the professionals have long since liquidated their gold holdings. As South Africa is not leaving the sterling area and the bulk of South African gold will continue to be sold in the London market, there is nothing against these gold shares as investments, except the political risk. ANGLO-AMERICAN, the leader of the market, which declared its dividend last week. has come back to I43s. to yield 63 per cent. On such promising new OFS mines as WESTERN HOLDINGS and PRESIDENT BRAND yields of 7.6 per cent, and 10 per cent. can now be
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obtained. For those who venture into this mark perhaps the safest bet would be OFSITS, which 67s. now yield nearly 7.3 per cent.
Shell
The rise of 13s. in SHELL TRANSPORT on the 20 per cent. scrip bonus and the increase in the dividend from 231 per cent. to 25 per cent. tat free was perhaps deserved, but as compared with other international oil companies the, ftov DUICH-SHELL group did not fare so well last yel Its sales were only 7 per cent. up in volume and 23 per cent. up in value. The net profit was little over 1 per cent., higher—against 9 per centti higher for Standard Oil of New Jersey and per cent. for Socony-Mobil. The Royal Dutch' Shell group did not appear to have been so successful in cutting its costs. In the last year or so the large oil groups have been hit by two adverse trends—discount selling of crude oil al d retail price cutting by independent companies and the Italian State-owned oil concern under Sgnr. Mattel. Competition from independents it forcing the big groups to spend more on market' ing plant and last year the Royal Dutch-Shell group invested £419 million—only £3 million less than in 1959. If SHELL maintain the 25 per cent. tax-free dividend on the increased capital, as the market expects, the gross yield at 1605• cum bonus will be 6.1 per cent.
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