19 JULY 1957, Page 41



IT was a sorry comment on the Chancellor's important pronounce-

! merit on inflation that the Stock Exchange should stage a recovery on Monday in everything except gilt-edged stocks. The slump last Friday was in anticipation that he would take some drastic measures, like tighten- ing up the hire-purchase restrictions, cutting capital investment and appealing for dividend restraint. Naturally, when it was found that nothing would happen, the store shares, which had been the most heavily sold, rebounded sharply and industrial shares generally shook off the unpleasant dream of a strong Chancellor. I cannot feel too optimistic about the bull market in industrial equities while the gilt-edged market declines every day. When the industrial share average yields only per cent. more than Old Consuls, it means that the leading equities are on a 31 per cent. to 4 per cent. basis. It needs a lot of faith and knowledge to buy on these terms—or a lot of funk of the inflation. Meanwhile the dollar premium has moved up to 741 per cent.

It is strange that the disquiet obviously felt about sterlingAby investors rushing into dollar stocks is not expressed by more buying of gold shares. But that market remains quiet and neglected, except for the spurt in `JOHNNIES' on the higher (25 per cent.) dividend which offers a yield of over 9+ per cent. at 52s. 6d. I would call attention to CONSOLIDATED GOLDFIELDS which is making an issue of ordinary shares at 40s. and 6 per cent. convertible loan stock at par in the form of a composite unit of one ordinary share and £2 of loan stock (on the basis of one unit for each five shares held). The company's activities are spread as to 55 per cent. in gold (including uranium), 19 per cent. in platinum, 15 per cent. in base metals and 11 per cent. in other interests. Increased earnings from its gold and base metals are foreshadowed. On the basis of the existing dividend of 20 per cent. (covered 2.7 times by earnings) the old shares at the present price of 48s. 3d. yield 8.2 per cent. When the composite 'unit' is split the new shares should be an attrac- tive 'free of stamp' purchase.

' * I am glad to see that AMALGAMATED METAL is at last paying an interim and final dividend to help the small investor. When the distribution was once a year the shares were almost as dull a market as COATS. Last year's trading in metals was well maintained, in spite of some sharp market fluctuations, and the company's 10 per cent. dividend was covered just over twice by earnings. The current metal trading outlook is not, perhaps, so good, but at 23s. 3d. to yield 8.4 per cent. the shares seem fairly valued.