Market report
CUSTOS
Judging by the strength of equity shares at the beginning of the week I would say that the market has completed its consolidation phase and is now resuming its upward trend. Take- overs are still largely responsible for the present activity. AEI is fighting the take- over bid from GEC by forecasting doubled profits by 1969, new schemes of rationalisation and Lord Beeching as chairman if indepen- dence is retained. On this promise AEI advanced by 4s, but did not hold the rise. Yorkshire Insurance also improved when General Acci- dent said that it would match the takeover bid from Phoenix, and when Phoenix riposted. The Bank rate rise has helped bank shares, particularly Barclays, which put on 4s. Inci- dentally, Australian bank shares have been rising in sympathy with the nickel boom in Western Australia.
Some more excellent company reports have maintained the keen investment interest in industrial shares. Leylands have forecast profits which seem to indicate earnings of around 171 per cent to cover the dividend of 111 per cent and at the same time have declared a one-for- four scrip issue. The £1 shares, which are to be split into units of 5s, rose sharply from 54s 6d to 60s 6d, at which price the yield is 3.9 per cent. Acrow has produced another fine report with record turnover, record exports and record profits, all achieved with 8.2 per cent less labour. Under the able chairmanship of Mr de Vigier these shares should be a re- warding investment. A one-for-ten scrip issue is being made and the directors forecast the main- tenance of the 25 per cent dividend on the enlarged capital. At 45s 6d the shares yield 3 per cent. Another striking report comes from British Printing, which has made a remarkable comeback under its new management. Profits for the half-year are 50 per cent up. The in- terim dividend is a point higher at 5 per cent and if the final is 10 per cent the 5s shares at 19s 9d would yield 3.-+ per cent.
The gilt-edged market took the per cent rise in Bank rate calmly. As it had already been discounted, the 'shorts' were actually marked up and there was even a firmer ten- dency in the 'longs.' Technically the market remains firm. The speculators or 'spivs' are out; only the genuine long-term investors are in. And these are prepared to wait for better times, being fortified by yields of around 7 per cent on the 'longs' and as much as 7 per cent on some 'shorts.'
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