31 JULY 1959, Page 25

Investment Notes


HAvnia recovered from its technical set- back the bull market has become quieter and less interesting and this I think should be its condition over the holiday period—lasting perhaps until the election date draws near and brings a re-appraisal. 'The sitting bull' is an apt description of its Present condition. But I notice an increasing election awareness which has affected some Markets, particularly in television shares. ASSOCIATED TELEVISION reported a rise of 44 per cent. in gross profits to £5.3 million and although the dividend, as expected, was brought up to 100 per cent. (covered 1.9 times), the 5s. `A' shares rose only ls. on the news and then fell by 2s. to give the handsome return of 8 per cent. This indi- cates some market nervousness which was not dispelled by the report of ASSOCIATED BRITISH PICTURES. The directors of this ably managed company warn shareholders not to assume that the record profits returned Would be maintained. Their report was parti- cularly interesting for the break-down be- tween cinema and television earnings. The cinema profits have actually held steady at around £2.4 million while the television Profits have soared up to £3 million, or 56 per cent. of the total. In the first three months of the current year the television Profits of ABP were apparently 8 per cent. down on the previous year. At 40s. 6d. to Yield 7i per cent. on the 60 per cent. dividend covered over a times ABP shares are clearly it safer and more solid way of participating In television.

Paper Shares Just when it had begun to make a very fair recovery but before it had been able to Work out of its excess supply the paper in- dustry in this country is now threatened by the upset of the `little' free trade area, not to (Continued on page 150)

Investment Notes—continued mention the printing strike. Whether or no the Government expects this scheme to be the forerunner of the greater free trade area, the immediate impact is bad, for the Scandi- navian exports which will be kept out of the Common Market will be flooding into Britain. Newsprint is not affected as it enjoys no tariff protection but the kraft papers have a 14 per cent. duty and some high-grade printing papers 161 per cent. Scandinavian competition in these lines will be serious when the 'little' free trade area starts with a tariff cut of 20 per cent. BOWATER with its huge North American interests and its pre- dominance in newsprint is least affected. The merchants (SPICERS, etc.) should have a larger volume to offset a falling profit margin, and the converters who use mainly raw materials purchased in the open market (E. s. and A. ROBINSON, etc.) may even benefit. But the prospects for A. E. REED, WIGGINS TEAPE, INVERESK, etc., are definitely clouded by this political development. Per- haps the safest course for the prudent investor would be to switch into the 5$ per cent. convertible debenture of BOWATER which has come back from over 110 to 1051.