FINANCE AND INVESTMENT
By CUSTOS
IT is already apparent that the recent pause in the stock markets did not imply any reversal of the upward trend of security values, but merely a process of consolidation. In the second half of September the pace was hot, and although the buying was solid enough, there was bound to be some profit-taking. What is im- pressive is the ease with which any selling has been absorbed. Home industrials, South American bonds and rail stocks, base metal stares all ;dvance in turn, and even the hitherto neglected home railway preference and ordinary stocks have had the limelight. Having stressed the merits of home rails so often when prices were substantially below present levels, I regard the rise as overdue.
NEW SAVINGS CERTIFICATES
In offering the new series of Savings Certificates the Treasury has obviously made a compromise with the National Savings Com- mittee. Statistical inquiry showing that less than 5 per cent. of the holders of the existing Certificates possess the 5oo maximum has strengthened the Treasury's hand in refusing to meet suggestions that this limit should be raised. Moreover, it seems that a large proportion of the holdings of soo were acquired at one stroke„ which means that the tax-free quality of th: Certificates has made a strong appeal to surtax payers and other large investors. It is not sur- prising, in the light of those facts, that the Treasury has confined its policy to offering a new series of Certificates giving a much less generous tax-free return. Purchasable at 2os. up to a maximum of £250, the new units will be worth 23s. at the end of io years. This is equivalent to receiving tax-free interest at £i 8s. zd. pe.r cent. per annum, or £2 I68. 4d. per cent. gross for those paying income-tax at Jos. in the £. Compare this yield with the £3 3s. 5c1. tax-free obtainable on the existing Certificates and you have a measure of the Treasury's regard for the hopes of the surtax payer. Nevertheless, I think this step was overdue and will give a fillip later on to the savings' movement.
" EMMIES " AND DECCA RESULTS Both Electric and Musical Industries and the Decca Record Co. are now principally engaged on war work and both show rather higher profits. For the year to September 3oth, Electric and Musical shows profits, struck after providing for taxation, exceptional charges and contingencies, of £153,56o, against £126,581. The ordinary dividend is maintained at the 6 per cent. rate at which payments were resumed a year ago, and the Jos. shares have held up well around 16s. 6d. in spite of the fact that market dealers were hopeful of an increase. Trading profits of the Decca Record for the year to March 31st rose from £64,674 to £89,302 and net profit from £32,865 to £56,165. In consequence, earnings on the is. ordinary shares were up from 86 to 16o per cent. It would therefore have been an easy matter to increase the dividend, but the board has followed the path of caution in raising the reserve transfer from £15,000 to £4o,000 and merely maintaining the dividend at zo per cent.
A LOW-PRICED PREFERENCE In the revival now taking place in coal shares the 4s. ordinary units of Amalgamated Anthracite Collieries have been prominent with a rise from 9d. to Is. 74d. Buying has been based on the knowledge that the company is now experiencing a good demand for its products at satisfactory prices. It seems certain, therefore, that the next accounts will justify the chairman's forecast at the last annual meeting of improved financial results. On this assump- tion, however, the company's £t preference shares at 8s. are much better value for money than the ordinaries. Entitled to a 31 per cent, cumulative dividend and with participating rights up to a further 4 per cent., these shares are two years in arrears for their dividend.
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