20 JANUARY 1961, Page 26

Investment Notes


MR. TUKE, the chairman of Barclays, de- plores, as much as I have done, the demoralisation of the gilt-edged market brought about by Treasury policies. The final blow will come next month with the unnecessary market- ing of the iron and steel prior charges. The equity markets will then be confirmed once again as the only market which trustees and others can have confidence in for long-term investment. Gilt- edged stocks are now only suitable for short-term investment—even the 'longs.' If the iron and steel issues force the gilt-edged yield much over 6 per cent., the 'longs' might then be attractive on short term for recovery. In the meantime the equity markets were cheered this week by the news that ICI is not to raise as much fresh capital as it feared. The issue is to be £35 million— one new at 55s. for every twenty held—which will take advantage of the money available from the Ford take-over. The 1960 gross profits are up 20 per cent. and the dividend is being raised from Ilf per cent. to 131 per cent., which was what the optimists were going for. As a result bear covering on this news put the shares better. At 68s. the shares (cum rights) yield 4.1 per cent. and will remain firmly held in most portfolios. The same applies to WOOLWORTH, although net profits, due to the higher tax, were only 51 per cent. up. A final of 25 per cent. is being paid on the capital increased by the two-for-five scrip issue and it seems that 40 per cent. can be taken as the likely total for 1961. At 58s. 6d. the yield would be nearly 31 per cent.

American Equities Our trade figures confirm the worst fears of the balance of payments deficit and arouse apprehension of next April's Budget. Many pro- fessional investors are now turning to Wall Street and it is notable that a small premium has returned to the investment dollar. Wall Street has already risen in anticipation of the economic recovery which Mr. Kennedy's friends are bank- ing on, but there is another 10 per cent. rise due before the market tests its 1960 high. British investors can buy the leading stocks easily in London—the jobbers quoting fairly narrow prices—and my advice is to stick to the leaders such as US Steel, International Nickel, Johns- Manville, Air Reduction, etc., which can be watched in our daily press. Incidentally, now that Americans are not allowed to hold gold abroad, there is a greater interest in gold shares.

Liebigs There was some disappointment over the Limos preliminary report for the year ending last August, although group profits before tax were 4 per cent. up and the dividend was raised from 13 per cent. to 15 per cent. Equity earnings have actually fallen from 38 per cent. to 36} per

cent., indicating that profit margins have be°_, cut. The company has countered this by raising the price of its Oxo cubes by id. This will met' assuming, as you may well, that sales are un' affected, that the next year's report will be highll satisfactory. The fall in the shares, therefore' presents a good buying opportunity. At 68s. the shares now yield 4.4 per cent.