Market Notes
By CUSTOS
TOCKBROKERS are not actually starving but on 3Monday this week the number of bargains marked-7,352— was the lowest turnover since December 1957. This was partly due to the enormous amount of money locked up in the £60 million issue of ICI 8 per cent loan stock which was said to have been forty times over- subscribed. (On that basis the 10 per cent on application would have required £240 million.) A premium of 4 to 5 per cent is expected. Gilt- edged stocks have remained firm, the market being less apprehensive about the queue of in- dustrial borrowers. A consequence of the recovery in short-dated Government bonds has been a demand for the depressed shares of the discount houses. Most of the leading shares have put on several shillings and now yield well under 6 per cent, with the exception of CLIVE DISCOUNT'S 6.7 per cent.
Some profit-taking has been seen in oil shares after last week's recovery but the 'under-tone' is firm. The interim dividend from SHELL was cut less than expected-10d. against the equivalent gross of 11.9d. Some brokers are going for a total of 40 per cent and some for 42f per cent gross for the year. On the latter basis the yield at 36s. 3d. would be 6 per cent. This would be a slightly better yield than that on BP at 68s. Thanks to its huge 'over-spill' tax relief BP is maintaining its distribution and will probably pay 4s. 4d. gross. Its half-year report was excellent and suggests a rise in earnings this year of around 10 per cent. This would give a price-earnings ratio of about 12f per cent.
Motor shares have been depressed by the strike at BMC, as one would expect, but steel shares have made a sharp recovery, as one would not expect, on the report that a Conservative banker far removed from the steel industry is to head the reorganisation committee. Perhaps this foreshadows mergers and closures in the best banking tradition. It would not surprise me if the Government, having bought out the companies at a bargain price, makes an enormous profit by selling redundant works to private bidders.
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