FINANCE AND INVESTMENT
By CUSTOS
In so far as the inactivity in the stock markets is attributable to the counter-attractions of the Wings For Victory weeks, there should be some improvement in turnover in the near future when this intensive savings drive comes to an end. Gilt-edged stocks should get the most benefit, and the recent steadiness of this group may well have reflected buying based on this assumption. I feel, how- ever, that it is unlikely that markets as a whole will get very far until the "amphibious operations " of which Mr. Churchill has warned us have been put in hand. In the meantime, prices obsti- nately refuse to move down, and will not do so as long as the main body of holders is content to sit tight. The chances of a further broad improvement still outweigh the risk of a general decline.
CABLE AND WIRELESS POSITION
Full figures of Cable and Wireless, Limited, the operating com- pany in the Cable and Wireless group remove any misgivings there may have been about the trend of traffics, without elucidating the E.P.T. position. It is obvious that in spite of the loss of traffic in the Far East, war-time activity has reached such a pitch .that the gross receipts of the Cable and Wireless operating company are still increasing. Last year there was a further rise from £9,195,139 to a new record of £9,766,526. Net profit, on the other hand, showed little change at £1,278,718 owing to the very heavy charge for taxa- tion. just what the E.P.T. liability was cannot be judged from the accounts, but it is disclosed that a sum of £2,too,000 was pro- vided last year for E.P.T., income-tax and for transfer to special account in accordance with the agreement with the Treasury. It is also shown that the balance of £3,341,956 carried forward from the 1941 accounts, which was subject to E.P.T. and other payments, was reduced by over £3,000,000 as a result of the settlement of the provision to be made under these heads. To meet ET: T., income- tax and the transfer to special account under the agreement with the Treasury, the provision made for 1941 was no less than £2,84o,000, while a further sum of £200,000 was transferred 'E) general reserve.
HONG KONG BANK POSITION
These are strange days for shareholders in the Hongkong and Shanghai Banking Corporation who in pre-war years were ac- customed to receiving regular and very satisfactory dividends. Events in the Far East have prevented the board from issuing any accounts for 1941, and a statement of the position at the end of 1942 has been prepared only after surmounting great difficulties. At the same time, the position disclosed is reassuring from the long-term stand- point. The balance-sheet shows, for example, that at December 31, 1942, this bank had something over £33,000,000 in cash, money at call and gilt-edged securities out of a balance-sheet total of £84,697,075. Assets in enemy-occupied territories and other assets unrealisable owing to the war amounted to £41,464,171. As Mr. A. Morse, the new chairman in London, points out, this position is not altogether unsatisfactory for a bank whose business in Hong Kong, Malaya, Burma, Java and the Philippine Islands is now in enemy hands.
INVERESK DEBENTURES
In reminding holders of the 6 per cent. debentures of the Inveresk Paper Company that the time is now approaching when they should exercise their right to convert into the Ordinary shares, I feel that it is worth while calling attention to the attractions of these deben- tures at the current market price. Quoted around £xso, they offer a medium through which one can purchase the is. Ordinary shares at is. 6d., provided, of course, the conversion right is exercised. As the is. Ordinaries are themselves standing at is. 70., a buyer of the Debentures gets in on rather cheaper terms. The last dividend declared on the Ordinary capital was 6 per cent., at which the yield at is. 6d. is only 4 per cent. The case for these Ordinary shares is that the 6 per cent. dividend was earned with a very large margin to spare, that the Ordinary capital even after the con- version of the Debentures will remain highly geared, and that the post-war prospects of this group of paper manufacturing companies, whose financial position has been steadily improving in recent years, are decidedly good.
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