6 MARCH 1964, Page 27

Investment Notes


LIMOUSIN enough the Bank rate decision cleared the investment air. It was felt that if a 5 per cent rate really succeeded in bringing a check to the pace of expansion the medicine in the Budget might be less unpleasant than was feared. At the same time the political polls, moving further in favour of the Conservatives, helped market sentiment, especially in property and insurance shares. For the time being equity shares seem likely to make a further recovery. Company reports are also helping. Following on the favourable ICI report the ALBRIGHT AND WILSON results were distinctly encouraging.

A Dollar Interest

Wall Street continues its upward trend, in- dicating a strong bull market. The investment dollar premium is now down to 10i per cent, v,hich makes it less painful for British investors to switch from sterling into dollar e.;u:ties. But to those v.ho still dislike paying a premium of over 10 per cent I recommend aottAx Iti)LDINGS, which has a 75 per cent interest in the US Borax and Chemical Corporation. In the second half of the year ending in September last the British holding company enjoyed a sharp improvement irt demand in both British and European markets for its boron products. In the UK sales increased by over 10 per cent and of the total net profits of £1.7 million the American inter- ests account for over 80 per cent. Earnings have risen to nearly 30 per cent and the dividend has been stepped up from 14 per cent to IS per cent. In the current year trading profits are running 30 per cent above the corresponding •period of last year. At 19s. 11d. the 5s. deferred shares yield 3.9 per cent On dividends and over 7 per cent on earnings.

British Sugar

The agreement with the Government, for the release of BRITISH SUGAR from its financial stranglehold was disappointing and I cannot help feeling that the shareholders should have had independent advice, the Chairman and the board being government appointees. The cornpa ny is not after all to be entirely freed from govern- ment control. The Minister will continue to appoint the Chairman and two other directors and no alteration is made in the current practice for fixing the guaranteed price to be paid for sugar beet or the selling price for sugar (if the standard price is below the guaranteed price the Sugar Board will pay the difference and if it is higher the company will pay the difference to the Sugar Board). However, it is a relief that in exchange for an end to dividend limitation the company share capital has been doubled, half the bonus shares going to the Sugar Board and half to the shareholders, who will therefore re- ceive a one-for-two scrip issue. It is calculated that the company in 'a normal average year should make around £1.8 million before tax, which will enable a dividend equivalent to 9 per cent against the present maximum of 7 per cent to be paid, with a dividend cover of about twice. The bulls in the market were disappointed and the shares fell 3s. to 33s. 6d. to return a yield of 5.4 per cent.