Investment Notes
By CUSTOS
ANEW three-week account has opened on the Stock Exchange with a mixed showing, but with government stocks barely holding their re- cent recovery. The market seemed to ignore the wider effects of the important new double-tax agreement with America, which favours Ameri- can investment in the UK and discourages British investment in the US. but took a good view of the narrower effects upon the British halves of such international groups as ROYAL DUTCH-SHELL and UNILEVER. As we have agreed with the American Treasury's case for an identical with- holding of tax of 15 per cent on dividends, as recommended by the OECD, there will be no special benefit to American investors in holding Durot or UNILEVER NV, which have been com- manding high premiums over SHELL and UNI- LEVER LTD. In anticipation of American switch- ing into Shell. the market in Throgmorton Street quickly put up the price to 38s. As the 1966 Shell dividend, under a corporation tax of 40 per cent, is not likely to exceed 40 per cent, I think the shares to yield 53 per cent, are not so so attractive as BP which, as I recently pointed out, could possibly pay sufficient to give a. yield of over 6 per cent at 60s. Strangely enough, the Americans did not sell Royal Dutch this week but actually bought them, putting up the price to 173 to yield only 3; per cent.
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