Market notes
CUSTOS
The market quickly shrugged off its fit of de- pression caused by the bad trade returns, the labour troubles, the postponement of the BP interim dividend and the Government's sour image, and the FT index reached an• all-time high. Wall Street helped by staging a strong recovery even before the President decided to spend $3,500 million on an anti-missile system. It now looks as if the market is counting on a change in economic policy (meaning more refla- tion) or a change in government or both.
BP is now steadier after its fall at 61s 3d, but Shell has moved strongly ahead and is now 45s 6d ex dividend. This is a rise of 4s since the BP shock. There is no doubt that, thanks to its American subsidiary and its in- terests in Venezuela, Shell is in the best position to ride the storm from the Middle East.
The closest link yet between a merchant bank and a joint-stock bank is implied by the Mid-
land's arranging to buy a one third interest in Samuel Montagu's parent company, Montagu Trust, for £8,680,000. (Mr David Montagu writes on trends in banking on page 334.) The Midland and Montagu's also announced that they were forming, with Dutch, German and French partners, a new Continental bank for medium-term finance. Other joint-stock banks with links to merchant banks are Lloyds, with an indirect stake in William Brandt's, and National Provincial, which shares a subsidiary with Rot hsch ilds.
There has been no recovery in the wool tex- tile shares, which had been marked as potential losers from the proposed merger between United Drapery and Montague Burton, now unhappily banned. Both Illingworth Morris and Parkland Manufacturing are big suppliers of cloth to Burton and LDS, but orders from' other retailers are on a hand-to-mouth basis and the export trade to America has been depressed. Illingworth Morris profits for the eighteen months to March 1967 were 40 per cent down. Although the dividend was maintained, giving a yield of 10.8 per cent on the 'A' at 4s 60, the shares are considered too high on a price/ earnings ratio of 20.6. Parkland is more reason- ably priced at 13s 3d on a price/earnings ratio of 13.2 and a dividend yield of 6.6 per cent, but there is no sign yet of recovery in this industry, which is still suffering from a grievous over-capacity (about 20 per cent).
The 10 per cent rise in the price of. nickel Caused a jump in International Nickel and a spurt in Western Mining of Australia to 179s, but thereafter came a reaction. The general im- pression is that Australian shares have momen- tarily had a steep enough rise.
Previous page
