19 MAY 1961, Page 32

Investment Notes


WHAT brokers call 'consolidation' is at work in the share markets. Buying and selling is more evenly matched. The Trustee Bill is expected to pass before the summer parliamen- tary recess and this implies that the equity markets will remain firm. But seeing that the insurance and property share groups have each had nearly a 50 per cent. rise in a little over four months this year, the pace of the advance must surely slacken down. Perhaps more attention will now be paid to the unfashionable groups. SHELL has actually recovered this year by 30 per cent., thanks to the announcement of a one-in-five scrip bonus and the splitting of the shares which the retiring chairman, Lord Godber, says will take place in the near future. The oil surplus still persists and competition is cutting into profit margins, but Shell is well placed to meet it and if demand for oil outside the Soviet bloc in the next ten years is to rise by 50 per cent., as Lord Godber estimates, it is still a 'growth' industry, but as profits will not rise with turnover, I would leave oil shares alone for the time.

Insurance Shares The lively behaviour of insurance shares sug- gests that waves of buying from certain unit trusts and other institutions, not to mention some buying from America, periodically catch the jobbers short of stock. The fantastic rises which have been seen should therefore make for cau- tion, but I remain bullish for the long term. Of the composite companies, some of which are still making underwriting losses in America, I still favour EAGLE STAR and GENERAL ACCIDENT. It Will be observed that Eagle Star is drawing £930,000 surplus from its rapidly growing life fund during the prescnt triennium and more is to come. At 130s. to yield 2.1 per cent. the shares are still attracting buyers. General Accident also has a rapidly increasing life fund and is also invest- ing heavily in ordinary shares. The directors are proposing later this year to distribute a one-for- one scrip issue in ordinary stock. At 169s. the yield is now only 1.9 per cent.

Finance Houses The shares of London financial houses are never offered at bargain prices, but with MERCURY SECURITIES (owning 50 per cent. of Warburg's) yielding only 11 per cent. some are beginning to look very dear. SINGER AND FRIEDLANDER are subdividing. their £1 into 5s. shares and making a rights offer of one 5s. share for every £1 at 9s. At 79s. they would yield 21 per cent. on a 9 per cent. dividend, but in view of the good trading this bank is experiencing this year, I would not be surprised to see the dividend go up. The next interim dividend will be declared in September.