30 AUGUST 1946, Page 22

FINANCE AND INVESTMENT

By CUSTOS

INTERN/mom% politics flanked by falling prices on --Wall Street, have again cast their:shadow over the London market. What is more remarkable than the damping influence of these developments on the will to buy is their almost negligible effect on the volume of selling. That would-be buyers should hold off in face of the dead- lock in Paris and Wall Street's obvious state of bewildered depres- sion is natural enough. That so few people should decide to sell is a fresh proof of the strength of investment sentiment here and of a healthy technical position. Nobody must suppose that there is going to be any gay upward movement in this market from the present high level. Buying will be more and more selective.

A TRUST TRANSFORMATION - ' Rather less than a year ago a small group headed by Mr. A. E. Somers, who is a leading figure in the Bell property organisation, made a bid at L19-I per Ltoo for a block of Ordinary stock in the Investment Corporation of Canada. The controlling interest, which was held by Power Investment, was sold on those terms to Mr. Somers and his associates, and new directors, headed by Mr. Somers, took charge. In the eight months during which the new board has been in office some remarkable changes hate been effected. On the one hand, the trust's portfolio of Stock Exchange securities has been liquidated. On the other, the trust has purchased the equities of important property-holding companies the most important being Bell Securities Limited. The net result is that Investment Cor- poration of Canada in its report for the year to 'April 30th, 1946, shows itself as the holder of real property on a substantial scale and the recipient of a satisfactory income. Already three and a-half years' arrears of dividend on the Cumulative Preference stock have been paid, bringing matters up to April 30th, 1944, and it is a safe assump- tion that the whole of the outstanding arrears will be eliminated in the near future.

In his statement Mr. Somers makes it plain that further acquisi- tions of property are in contemplation and that a large-scale refinancing operation is to be carried through. This will effect substantial savings in interest charges and will pave the way, once the Preference arrears are wiped out, to the payment of a satisfactory dividend on the Ordinary stock. This is an extraordinary change in the position of a company whose prospects a year ago appeared anything but promising. It has been brought about by ingenious means in that the equities of highly-geared property-holding com- panies have been transferred to Investment Corporation of Canada on very attractive terms. Quoted around £85, the 4+ per cent. Cumulative Preference stock, carrying two and a-half years' arrears of dividend, is a promising investment if any stock comes. on offer in the market. The Ordinary, which has moved up from about £30 to £96 over the past few months, also looks a good speculation.

A PROMISING PREFERENCE

Among the shares still available in the market carrying arrears of dividend the 6 per cent. Cumulative Li Preferences of Central and District Properties look an interesting proposition around 23s. 6d. Arrears date back to January 31st; 1939, equal to about 4s. 6d. net per share, so that assuming that full value is forthcoming in the shape of some form of funding scrip in satisfaction of the arrears, a buyer at today's price, is giving rather less than par for a 6 per cent. Preference share. Like other property concern's, this company was adversely affected by the war and was unable even to meet its deben- ture service requirements. During the past four years, however, a recovery has set in and net rents have steadily improved. In conse- quence, the directors have foreshadowed that during the current year ending October 31st all arreaft of dAntUre interest will be duly met, thus clearing the way for tackling the Preference arrears problem. As a brake on_ recovery, there are, of course, the restric- tions imposed by the Rent Acts on properties let at lower than normal rentals in September, 1939, and the delays in obtaining licences for war damage repairs. Subject to those qualifications, however, there- seems good reason to suppose that the company will stage a good recovery during the next two or three years.