29 SEPTEMBER 1944, Page 22

FINANCE AND INVESTMENT

By CUSTOS

APART from a slump in insurance shares, there has been virtually no visible reaction in the stock markets to the announcement of the Government's social insurance plans. Gilt-edged have held firm as a rock, and the speculative groups, including home industrials, have shown no disposition to move away from their position of steady restraint which they have occupied for the past fortnight. This is an understandable and logical attitude to adopt towards a piece of social legislation whose financial and economic implications can only be a subject of guesswork at this stage. True, it is possible to estimate that the extra money cost of the proposed scheme will involve only another is. or less on the standard rate of income tax, but the real cost, which is what ultimately counts, will depend on the size of the nation's production. That may well be influenced, one way or•the other, by the redistribution which the new plan proposes. If the effect is to stimulate effort, the money cost will be easy to bear, but if the nation's productivity falls away, the real cost will be heavy, and the standard of living will fall.

As for the tumble in the shares of the industrial life offices such as the Prudential and the Pearl, I feel that the downward adjustment has been rather overdone. Although the approved societies are to go, which must restrict the " right of entry " of the industrial assurance companies which have acted in this capacity, there should be scope for replacing this type of business, and in any event the companies are strong. I should expect a moderate recovery from Wednesday's low levels, even if the previous quotations are not restored for some time.

DEBENHAMS' PROGRESS Recent buying of the is. Ordinary shares of Debenhams up to 8s. 41d. looks thoroughly justified in the light of the latest profit figures and dividend. For the year to July 31 profits reached a new record at £780,231, against £766,860. Reserve for taxation called for L125,000, against Doo,000, and the transfer to general reserve is maintained at £5o,000. Even so, it has been possible to increase the Ordinary dividend from i64 per cent. to 25 per cent., and to add £13,000 to the carry-forward at £319,035. On the 25 per cent. dividend the Is. shares yield only about 3 per cent., but the earnings yield appears to be about I21 per cent. It is important to keep in mind, however, that the record earnings figures just dis- closed relate to a period before the resumption of enemy activity which has hit stores trading in London pretty hard. Fortunately, the Debenhams group has very substantial interests in the provinces. Another point worth keeping in mind is that latterly expectations of an early end of the war have made retail trading less a seller's market than it has been for the past two years. Potential buyers are now willing to hold off and await events, with the result that it is no longer as easy to sell goods of indifferent quality at high prices. It will be surprising, therefore, if the London stores are able to show as good figures for '944 as they achieved in 1943.