FINANCE AND INVESTMENT
By CUSTOS
MARKETS are selective, but they are remarkably good. As I have often emphasised in these notes, there are technical influences making for a rise independently and even in face of any news from the war front. When the war news seems favourable, RS it undoubtedly does at the moment, the advance becomes quite rapid. Gilt-edged are still in the forefront, which is all to the good. There is nothing like a gently rising gilt-edged market to keep investment morale high, and help on the savings move- ment. Without subscribing to the view sponsored in some quarters of the City that events are shaping in the direction of a 2+ per cent. long-term interest rate, I am convinced that Whitehall holds the whip hand. I hope it will not drive the market too hard.
Outside gilt-edged buying is not on any great scale, but in- vestors and speculators, while showing considerable discrimina- tion, are ranging over a wide field. Home rails, Argentine rails, industrial equities, oils and Kaffirs are all attracting a following. In some of the buying one can even detect a predilection for shares with peace-time recovery possibilities. What other explanation fits the sharp rise in gas stocks and greyhound racing shares?
HIGH-YIELDING PREFERENCE SHARES
While the emphasis in all investment policy must be on Government bonds there must be many people to whom income yield is still important. They may be interested, therefore, in the following preference shares offering good returns :
Yield.
Priee. °A Amalgamated Press 7% Li Cum. Pref. 14s. od. Io Austin Motors 20% tos. Pref. Ord. 155. od. 8 Coast Lines 6i% Li Cum. Pref. 16s. 6d. 71 Gaumont-British 51% ft Pref. 8s. 6d. 13
Plan Bros. 7% £z Pref. ... 14s. od. to
All the shares included in my list are slightly speculative, but in my view the risk is adequately counterbalanced in the high yield. It would not be surprising if buyers at today's prices get the benefit of a moderate rise in capital value. Yields on this type of share will almost certainly fall as the search for income goes on.
SIR JOHN HAY ON RUBBER
Every shareholder in the rubber plantation industry should study Sir John Hay's review at the United Sua Betong meeting. He makes it clear that although, owing mainly to rising domes- tic demand, America's reserve stocks are not being built up at the rate .anticipated, the British producing industry has achieved an enormous increase in shipments. He approves the centralisation of America's purchases through the Rubber Reserve Company, and the setting up of the Rubber Control here. These are measures apptopriate to the special needs of the times. Sir John is critical, however, of the method by which the Rubber Control was brought into being, and is sympathetic to the case of those in Mincing Lane who now find themselves without a livelihood. As for the earnings prospects of United Sua Betong, they are obviously good, but Sir Kingsley Wood will take heavy toll of the increase in gross profits.
BANK INTERIMS HELD Nobody expected any change in the interim dividends of the banks and none has been announced. It would have been foolish of the banks to make any cuts unless the earnings compelled them and fortunately the necessity has not arisen. Expenses are high, and advances, the most remunerative outlet for banking funds, are still falling, but against these factors one can set the increase in deposit resources, and the favourable experience in relation to bad debts. Unless something unforeseen happens, the odds are strongly in favour of the banks paying the same dividends for 1941 as for 1940.
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