FINANCE AND INVESTMENT
By TERENTIUS
HOME railway nationalisation has been the principal market in- fluence and subject of controversy. There are many angles, but on the whole it is thought that, if the Government's terms are not generous, at least they have the merit of simplicity. There is one major uncertainty, namely, the rate of interest which the new com- pensation Stock will bear. The vesting date is not known and holders may expect to receive dividends in respect of 1946—a quite important item where the junior Stocks are concerned as, for example, London and North Eastern Railway 4 per Cent. Second Preference with a " take-over " price of 29+ which may be entitled to a final dividend of 21 per cent. Otherwise the dilemma is quite clear. Should stocks be sold now for immediate re-investment or should they be held as short-term gilt-edged investments standing below par against the contingency that, when the present squeeze is exhausted, permanent holdings will be obtainable on better terms? The investor must make his own decision bearing in mind the abundant evidence that the present Government is determined to pursue its nationalisation-cum-dheap-money policy and that further turns of the investment screw are still to come. I will only repeat that at a time when yields are so low the investor who has a free choice should plump for values.
SHIPPING SHARES
Values are beginning to play an important part in this market which has in the past consistently refused to reflect to any reasonable extent the great increase in shipping assets and earnings. Peninsular and Oriental Steam Navigation Deferred, which I recommended recently, are 635., and the dividend, including a 5 per cent. bonus, is raised to 12 per cent. Asset values exceed several times the present market price of the shares, and when the Cohen Committee Report is implemented the company's consolidated profit and loss account will disclose an earning capacity making the present payment look very meagre.
Again, Cunard have been a strong market up to 38s. with O.S.N. Realisation 66s. The latter is essentially a realisation proposition, depending upon the price at which the underlying holding of Cunard- White Star (which actually owns and operates the ` Queen Mary ' and ` Queen Elizabeth ') can be liquidated. It has been suggested that if this operation cannot be carried out favourably within the next twelve months it never will be. Making a reasonable assessment of the value of Cunard-White Star in relation to the market quota- tion of Cunard, O.S.N. Realisation might easily " break-up " at 85s. to 9os. This is a stock for the surtax-payer who can face fluctuations, but I recommend it with some confidence.
ROYAL BANK OF SCOTLAND
The current report of the Royal Bank of Scotland just issued discloses satisfactory progress. Expansion in trade is reflected both in growth in deposits and in advances. The Bank was incorporated by Royal Charter in 1727. No suggestion has yet been made that it should be nationalised, and it is to be hoped that the question will never arise. It would be a poor thing if such a long and able tradition should be submerged in a mass of bureaucratic routine and if among other interesting survivals the right of the proprietors to receive their half-yearly dividend " at Christmas " should be lost.
A PROPERTY PREFERENCE
There are a certain number of London and Westcliff Properties 6 per Cent. Cumulative Preference Shares in the market at 25s. with arrears of dividend dating from February 1st, 1940. Naturally in view of the location of the company's properties it suffered heavily during the war, but it is gradually making a useful recovery. In their recently issued report the board indicated that improvement had continued and that they expected to be in a position to make a start on clearing arrears of Preference dividend in the near future. The market is in the nature of things rather narrow and the shares cannot be regarded as a sound investment, but they do seem to be, in relation to other values, a promising risk.
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