Bargain Hunting Support •
By Our City Editor
With the previous week's closing prices heavily discounting the possibilities of difficulties in the current settlement, the un eventful conclusion of "carry-over " arrangements on Monday last produced more comfortable conditions in the Stock Markets for the opening of the three-week Account, which covers both the Coronation and the Whitsun holidays. The professional support noticeable on Friday last paved the Way to an all-round recovery during the opening days of the past week, a movement .which gained impetus from Tuesday's publication of the excellent unemployment figures.
A feature of the revival has been the widespread public inquiry for good issues which had fallen to bargain levels, and a considerable volume of small buying was reported on this account, which is evidence of the amount of idle capital that has been awaiting just such an opportunity as the recent slump has provided. An instructive indication of the erroneous dimensions of the recent shake-out may be obtained from the fact that many buyers found it impossible to get stock at anything near the apparent prices. This is explained by the fact that in many cases previous quotations had been reduced to a purely nominal basis, dealers neither wishing to sell shares they had accumulated higher up, nor further add to their stock except at sacrifice prices. This proves that the slump was, in fact, less drastic than it was made to appear.
The past week's revival in the Stock Exchange was greater and of a more general nature than had been anticipated. Gilt-edged stocks were well supported and showed all-round gains. National Defence Bonds improved from an 1-8 to 1-16 discount. Despite the restraining influence of the labour position, Home Rails were responsive to small demand, notably L.M.S. arid Westerns. Argentine Rails were firm with particular demand for Centrals and B.A. Western. Among Home Industrials, Irons and Steels, Breweries and Shipping issues all went ahead. The Aircraft and
Motors groups were also higher. British Oxygen, Courtaulds, Distillers, General Electric and Murex were prominent among the leading shares to show improvement. Pressed Steels dropped to 23s. 9d. on profittaking after the dividend, but later recovered to around 26s.
In the speculative sections, particular headway was made by Rand and West African gold shares. E.R.C.'s., Western Reefs, West Wits. and Ventersports were most prominent in the former section, while the latter was distinguished chiefly by Amalgamated Banket Areas, Aristons and Ci.C. Selection Trust. De Beers Deferred were strong among Diamonds. Rhodesian Coppers and other Base Metal issues rose in sympathy with the sharp rise in metal prices.
Elsewhere, Oils were stimulated by the increased dividend announcement by Leaseholds, and an expansion of business produced good gains in most of the leaders, especially Shell and Royal Dutch. Transatlantics improved on the higher prices in Wall Street, greatest attention being accorded to Nickels and Brazilian Tractions. Rubbers were included in the general advance.
Industrial Preference issues are expected to find renewed favour under the operation of the new excess profits tax. This is a complete reversal of the pre-Budget tendency, when indications of slightly dearer money and consequent increase in equity yields were regarded as adverse factors in the outlook for pre-ordinary shares. In
view of the greater interest now attaching to Preference shares, and the good returns obtainable from this form of investment, I have selected a few shares for special consideration.
Alvis, Ltd., manufacturers of high quality " Alvis" cars and "Gnome-Rhone" air craft engines. 1 71 per cent. Cumulatiye Participating Preference shares now obtainable around 25s. 6d. to yield 7; per cent. Amount absorbed by dividend on this isssue of £100,000 is £10,000 (including 21 per cent. participation), while there was available last year after service of prior charges a sum of £34,823.
Avon India Rubber. manufacturers of various tyres, mechanical rubber goods, sports, accessories, flooring, footwear, etc. Issued capital of £250,000 represented by £1 6 per cent. Cumulative Preference shares, now around par and yielding 6 per cent. Dividends absorbs £15,000, and in the last accounts was covered by £25,959.
Weyburn Engineering, business of general precision engineers, specialising in the production of essential component parts for leading automobile and aircraft manufacturers. The 6 per cent. Cumulative Preference 10s. shares are now around 'Us. 6d.
to yield 5S per cent. Dividend absorbs only £3,600 and on the basis of the last profit was covered by £15,361.
German Bond Bargains
With the present scarcity of new investment opportunities in most sections of the Stock Markets, it may prove profitable to examine the scope in the category of the lower-priced Foreign Bonds. Among stocks which wear an appearance of particular value are the German 7 and 51 per cents., which will be more familiar as the Dawes and Young I.oans. These are now priced at around £59 and L431 respectively, at which they yield about 11 per cent. and 12+ per cent. In the case of the latter halfyearly interest is due on June 1.
An interesting story attaches to these Loans. When in 1934 Germany announced that she would have to default on all her external obligations, the British Government, while appreciating her difficulties as regards foreign exchange, entirely disagreed that this default was imperative, and in view of the threat obtained Powers to operate the Debts Clearing Offices and Import Restrictions Act in order to protect British financial and commercial interests. This meant that if Germany had defaulted on her external debts, we should have deducted the amount of interest due to British holders from our adverse trade balance due to Germany. This counter-threat produced an agreement whereby the interest of the two loans mentioned above which were in the ownership of British holders would be paid in full. Should this agreement be terminated at any time, which is extremely improbable, under Article 11 of the said agreement it Would be replaced by the clearing arrangement already referred to. In view of the fact that the annual amount required to pay the interest on these two loans is approximately only £1,250,000, and the trade balance in favour of Germany has been on an average of 12+ millions for the past four years, the interest seems well j secured.
Dutch Army C-in-C
Baron Voorst tot Voorst, general of the Fourth Division of the Dutch Army, has been appointed its Commander-in-Chief.
The new commander comes from a well, known Catholic family and is a leading personage among Dutch Catholics. He ;represented Holland at the Disarmament I Conference and subsequently wrote a book on it.