Investment Notes
By CUSTOS
ANEW Government 'tap' issue—£400 million of 5 per cent. Exchequer, 1967, at 98— does not make much sense. It was scarcely to make ready for the repayment of the £300 million Treasury SI per cent. due in November, for that is already accomplished. The depart- ments already hold the bulk of that issue. As £300 million of Treasury 5 per cent., 1986-89, was issued in May last, the Treasury is need- lessly over-borrowing. It is suggested that the new 'tap' will be useful for the banks, who are having a third of their special deposits repaid fabout £70 million), but why not let this release do the work it should normally do? It should help advances (if anyone really wants bank ad- vances in this stagnation period) or help to pull short-term interest rates down. Perhaps the Treasury does not want to see lower short-term rates—in case America has to raise hers to pro- tect her currency. How depressing and stultify- log the Treasury can be!
'quity Shares As I dared to suggest, our equity share mar- ets are slowly consolidating after their shock, but progress will be slow. Selling may dry up, but who wants to buy? The industrialists are not cheerful. Sir Eric Bowater told shareholders of BOWATER PAPER that he did not share the Government's optimism. The chairman of MOR- GAN CRUCIBLE said much the same. The only expansion possible will come next year from the Spending of the higher incomes which Mr. Lloyd has done his best to prevent. Little expansion appears to be coming from the export trade Which Mr. Lloyd expected to boom! Investors Should now begin to pick up the fallen shares Whose profit margins are not vulnerable to 'the Wage-cost inflation. The obvious group is in- surance. I was too hasty in suggesting a pur- chase of GENERAL ACCIDENT at over 100s., but I Cannot believe it is wrong to average at 77s. 6d. ex rights to yield nearly 2 per cent.
Philips Lamp
After the recent slump only the brave will buy the fashionable 'growth' equities on a low- Yield basis. Yet the time must be near when Miturs LAMP is a good purchase, having fallen nearly 40 per cent. from its 1961 high. The com- Pany is happily emerging from last year's profit slow-down. Sales this year have risen by 12 per Cent, and its profits in the first quarter were above those of the two previous quarters. The company is making a rights issue of two new Shares for every ten at Fl. 118 (one for five in the London units at about 98s.) and expects to Maintain the 16 per cent. dividend on the in- creased capital. The London shares are now quoted at 118s. to yield 21 per cent. This is more than double the yield that was obtainable a Year ago. A 'rights' issue requiring £70 million Odd is certainly a depressing market factor, but it is only temporary. I venture to suggest that a gentle plunge into this market will be re- warding.
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