FINANCE AND INVESTMENT
By CUSTOS
MARKETS are back on the defensive, but are yielding very little ground. Technically, the position is trim, so that the tone really depends on the morale of investors. That remains healthy enough in the sense that, although would-be buyers are restrained by the Russian news from launching out, nobody seems at all anxious to sell. Some of the more optimistic spirits may be revising their recent forecasts of victory early next year, but for the long pull, as they say in the United States, the prevailing mood is one of confidence. So we have stagnant but not weak markets.
Many.brokers, I suspect, would like to see prices fall back a little to enable clients' buying limits to be reached, and some jobbers would like to pick up cheap stock, but holders are dis- playing an altogether remarkable stolidity and tenacity. I hope and belieNie that they will refuse to budge whatever the pressure. More than that, the speculative brigade is ready to resume the offensive on the merest suspicion .of better news from the war front. For those who are prepared to look ahead, Cunard 6 per cent. Second Preference still has attractions at 1o6 and so has the ordinary. at I2S. 6d. There is scope for improvement, too, in Canadian Pacific Preference at £62 and the Common at rig dollars.. Traffics are steadily increasing, and net earnings would easily cover a dividend on the common stock.
COPPER DIVIDEND SHOCK
Shareholders in Rhodesiab copper mining companies have learnt from bitter experience that copper shares, !ike oil shares, are not he ideal war hedge most people thought they were in the autumn of 1939. Output has steadily increased, but not merely -have the Government driven a hard bargain in the matter of price, but the zoo per cent. E.P.T. lops off profits in a really devastating way. Mufulira is the latest example of the depreda- tions of the TreaSury on available earnings. This large-scale copper producer is now in full stride, but there is to be no dividend for the year to June 30th. A year ago the dividend was cut from 13.1 to II4 per cent., but nobody foresaw that the war-time floor would be as low as nil. Rhodesian Selection Trust, which draws its income entirely from its 64 per cent. interest in Mufulira, is the chief sufferer, but Rhokana also has a sub- stantial holding. Then, again, 54 per cent. of Rhokana shares are held by Rhodesian Anglo-American, so that altogether the Mufulira decision will have a pretty widespread effect. I know Sir Kingsley Wood is desperately hard pressed, but surely this is a case in which E.P.T. is reduced to an absurdity. Share prices have fallen rather sharply, but I do not think holders of Rhodesian copper shares should sell. These mines have a great future, and one day E.P.T. will be revised.
ALLIED INDUSTRIAL SERVICES After the interim cut, shareholders in Allied Industrial Services were prepared for a lower total dividend for the year to June 3oth. Trading profits set up a new record, however, at £238,312, and net profits, after charging £16o,000, against £128,390, for tax, were up from £72,989 to £77,993. This has justified the board in raising the final dividend, with the result that the total dis- tribution is held at 3o per cent. To judge from the chairman's review, fresh records are in sight, since the company is enlarging its factories. At 255., Allied Industrial Services 5s. Ordinaries yield about 6* per cent. on the 3o per cent. dividend and about 8 per cent on earnings. They have scope for improvement.
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