FINANCE - AND INVESTMENT
By CUSTOS
As the end of the year approaches, City views of the investment outlook are more than usually indeterminate. Nobody, of course, is wildly optimistic. Who could possibly look for a substantial or sus- tained rise in equity share prices against a background of enforced austerity, deflationary finance—even if only a mild type—dividend limitation and the change-over in many branches of trade from sellers' to buyers' markets ? Yet it is equally hard to find a solid basis for gloom. If British production is showing signs of flagging after last year's rise, it is not falling off. Re-armament expenditure in America and, to a lesser extent, in Europe will help to keep business active and to sustain the pricesspf key commodities. Add to these influences the obvious unwillingness of the great majority of investors to remain liquid, and the widespread seeking after capital appreciation and reasonable income yields, and you have a basis for an expectation, if not of rising, at least of firm stock markets. At the current level of Stock Exchange prices, both for fixed interest and equity investments, there is an obvious need for discrimination, but if. proper care is exercised there is no reason to fear that investors will come to any great harm.
MR, WOLFSON'S EMPIRE The L36,000,000 total of assets in the latest consolidated balance- sheet of Great Universal Stores justifies the description of this group as Mr. Isaac Wolfson's commercial empire. It is certainly to the dynamic qualities of the chairman that the rapid growth of the busi- ness, which has involved a long series of acquisitions, must be largely attributed. Mr. Wolfson has pursued a bold policy of buying up complementary concerns, and so far his purchases appear to have proved remunerative investments. Good dividends have been earned and paid on the increased capital and some fairly substantial transfers have been made to reserves. Having stated those facts, I must add that the financial strength of the group, as it emerges from the con- solidated balancezSheet, does not impress me. There are bank and [Continued on page 822.)
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other loans of just over £7,750,000, against bank balances and cash in hand of just under £3,000,000. True, stocks, as valued by the management, amount to Lio,too,000, a really large figure which doubt- less points to expanding turnover, but time will show whether the carrying of heavy stocks of merchandise is opportune when inflation appears to have passed its peak. Doubts on these points have bees responsible this week for a moderate setback in Great Universal 53, ordinary shares to 27s. 9d. despite the excellent profit figures. At this price the shares offer the high yield of over 7 per cent. Although they may well recover, I do not recommend them as a long-term holding.
CHEAP OIL SHARE
Since I outlined the attractions a fortnight ago of the Li Ordinary shares of Steaua Romana (British) around 5s. 6d., the company has held its annual meeting. Two important facts were brought to light—first, that the board has no intention of resuming trading either in Rumania or anywhere else ; and, second, that every effort will be used to speed up the settlement of the company's claims on the Rumanian Government, so as to pave the way for a liquidation. This is good news for shareholders, who can look forward to receiving substantially more than the current market price, even if the Rumanian claim brings in nothing at all. In the balance-sheet just issued holdings of gilt-edged securities in London amount to L736,000, or the equivalent of over 7s. a share. Investors who are prepared to be patient and await developments should receive at least that sum which, as I have shown, excludes any payment for the seized assets in Rumania And it need by no means be taken for granted that the Rumanian claims must be Written off.
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