Investment Notes
By CUSTOS
EQum(shares have run into a bout of selling --the present rush of new issues is partly responsible—and the gilt-edged market has re- turned to favour. This was occasioned by the return of the remaining special deposits (£81 million) to the joint stock banks. After each of the two previous returns the banks have increased their gilt-edged investments and are likely to do so again while advances remain sluggish. It is remarkable that in the six months it has taken the Treasury to return the special deposits Bank rate has remained fixed at 41 per cent., but with the further rise in the gold reserves surely Bank rate could now be cut to 4 per cent.? The long- term rate might then come down from 51 per cent. to say, 5+ per cent., and the business world made to feel that the authorities really do want to encourage it to make use of the new investment allowances. Unless money is made cheaper for borrowing, no businessman will feel that the Chancellor means business.
Store Shares Although the Christmas trade is expected to be a record—it is always helped by abnormally cold weather—there is no inclination to buy store shares. Although trade remains good, the shading of profit margins and the intensive corn- Petition from the super-stores and markets make Ibis almost a depressed trade as far as the Stock Exchange is concerned. However, no one can complain of Sir Isaac Wolfson's report on the half-Yearly results of GUS. Although the trading profit was only slightly higher, there was a sharp increase in the carry-forward for hire-purchase IA ulearned profit. Earnings will probably work out lor the year at over 60 per cent. (against 56 per cent.) and a final dividend of 221 per cent. is ex- reted, making, with the 10 per cent. interim, Per cent. for the year, against 30 per cent. The 'A' shares at the present price of 46s. yield Over per cent. on this basis.
Purchase urehase Mr. Julian Hodge, like Sir Isaac Wolfson, has Acquired the reputation of an inspired money- maker. The wonderful growth of his hire-pur- chase finance subsidiary, ANGLO-AUTO, has been maintained in 1961-6/ with profits before tax 60 Per cent. higher. Its success is due to Mr. Hodge's .slymdness in avoiding the bad debts of the other nire-purehase companies. A favourable tax charge has enabled earnings to rise to over 56 per cent. and the dividend has been raised to 45 per cent. against the forecast 40 per cent. The Is. shares at 13s. 3d. yield 3.4 per cent. on the new dividend and are now entitled to a one-for- ten bonus issue. This calls attention to Mr. Hodge's parent company, GWENT AND WEST OF ENGLAND. At 19s. 3d. these Is. shares return 3 per cent. on the forecast dividend of 60 per cent.
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