THE INVESTMENT MARKET

Otago Daily Times, Issue 26619, 15 November 1947, Page 3

THE INVESTMENT MARKET

Reduced Turnover on ’Change MOUNT LYELL’S SHILLING DIVIDEND By Gregory Only moderate business was transacted on the Dunedin Stock Exchange this week, but it was not the fault of buyers that the turnover was not considerably higher. The price trend continued upwards and buyers maintained their interest at the new levels, and generally speaking were willing to make any reasonable concession to vendors in order to secure their requirements. Fewer dividend announcements were made than usual, but amongst these increases were the rule rather than the exception. New Zealand Loan and Mercantile added a 2 per cent, bonus to the 6 per cent, ordinary dividend and Wilson’s Cement, Tooth Brewery, Abraham and Williams, Timaru Woollen and E. S. and A. Bank all announced srriall but significant increases whilst Mount Lyell, after an absence of three years, returned to the dividend paying list.

Shareholders of the preference issue of Korma Textiles did not have long to wait for results from the new proprietors ot the equity stock for within a week of the public statement that the ordinary shares had been purchased by Felt and Textiles of Australia. Ltd., preliminary advice was given of the company’s intention to double preference capital and offer the new stock to present holders at par (£1) in the proportion of one new share for each share held. Buyers quickly advanced their limits and business was made at 335, which implies a market value “ ex ” the rights of 26s 6d to supply a yield exceeding 33 per cent. The decisive political reverse in the Victorian elections had an immediate effect on bank shares and in their wake there was a further lifting of the already optimistic tone which dominates the Australian share market generally. The long-awaited announcement from Mount Lyell, if anything, exceeded apparent market hopes, but was not above reasonable expectations. Shareholders in Australia’s leading copper producer have had a ’’ dry ” three years, and the current Is in no way recognises the loss of income suffered by shareholders since the last payment in December, 1944 Last year the company made a profit ot

£13,153, but this trifling result actually represented a loss on mining and milling operations of £64,671 because it was only made possible by the income the company received (£77,824) by way of dividend from its own investments. The large investments in fertiliser companies held by Mount Lyell now give a great oeal more promise, and this factor,. combined with the £3O lift in the price of copper which was applied mid-year, has awakened more interets in the shares ot recent months. As a lucrative producer of the bright metal, Mount Lyell cannot hope to equal its success in days gone by, and must from present leases be content with a much lower-grade ore, which can only be profitably worked by reducing costs to compensate for reduced grade values. Thanks largely to improved‘ mechanisation, costs are being controlled in the face of the post-war trend, but a slim margin remains which limits prospects in the meantime. The M rights ” to new issue Chas. Begg and Co., Ltd., weakened Progressively throughout the period and lost a full Is on the week to close with business at 9s The weight of selling emanates troin an overseas quarter,, and is presumably necessitated by the inability of the veil dor to exercise his right to take up the new shares by reason of monetary control regulations. At the curtent figure a purchaser is acquiring a 3 2 por cent, investment with distinct possibilities o. an improvement on the present moderate rate of dividend. Some operators consider that a tactical error was made, in offering the entire issue in one piece, but true though this may be, companies are under no obligation to study market reactions when they are negotiating genu ine finance. This issue requires no selling,” and so far as vendors Of he “ rights ” are concerned it is just unfortunate that a considerable •weight has been thrown on the market b\ .oicea selling from overseas.