4 AUGUST 1961, Page 26

Investment Notes

By CUSTOS HE equity markets are still under the influ- ence of Mr. Lloyd and although the selling has never been great there will be no big support until the trustees come in to buy. And it seems that their entry will be gradual and cautious. If GUS decided to answer Mr. Lloyd's appeal and keep its dividend unchanged, there is no need to rush into equities. The best advice I can give to investors is to watch for oppor- tunities to pick up shares which have been de- pressed by new issues but are likely to benefit in the long run from our entry into the European Common Market. The notable example is DISTILLERS whose underwriters had to take up about 12 per cent, of the rights issue. At the issue price of 32s. 6d. (10s. paid) the shares free of stamp return about 41 per cent. Another case is the CITY CENTRE convertible loan stock 5s. paid at 4s. 9d., half of which has been left with under- writers. This gives a right of conversion in 1962 into City Centre shares at 60s. (now 54s.) which had been quoted at 65s. 9d. at the height of the property boom. Mr. Cotton and Mr. Clore are already exploring the development possibilities in Europe which City Centre might take up. There are other shares which will benefit from our entry into the Common Market—for example, to, JAGUAR, LEYLAND, STONE-PLATT, GLAXO, GOODLASS WALL, etc., but I must leave details till another week.

Gilt-edged The gilt-edged market has not quite settled down to the worst monetary deflation ever im- posed by a peace-time Government but already there are tempting prices in the short- to medium- dated market. For example Savings 3 per cent. 1955-65 is redeemable at par in four years' time and can be bought at 881 to yield 6.25 per cent. to gross redemption or 8.2 per cent. if the capital profit is 'grossed up.' Funding 3 per cent. 1966-68 is redeemable at par in seven years and can be bought at 801. The corresponding yields are 6.6 per cent. and 81 per cent. Poor old War Loan is down to 52f and establishes our long-term in-

terest rate at per cent. But the wretched local authority treasurers, desperately tight for money, are having to pay 71 per cent. to get seven-day call loans. It is not for me to comment on the harm these rates inflict on the housing movement.

Dollar Stocks Some institutions have been moving out of sterling equities into dollar—even into the cyclical stocks, and I am inclined to play for safety in a Canadian equity which is helped by the recent monetary casing-up and the small discount on the Canadian dollar. For example

anrunt, a leading pulp producer, can be bought at $75 London to yield nearly 4 per cent. and PAI-CONBRIDGE NICKEL at $115 London to yield nearly 3 per cent. I like also BELL TELEPHONE at $981 London to yield over 4 per cent.