October 1, 1945 11:00 am

Lex: The first column to appear in the FT

THE STOCK EXCHANGE

Buying for Transition Period

Rezende Mines

SUNDAY EVENING.

“LEX,” blushing what he hopes to be the correct shade, takes his place on the new and consolidated platform to greet old friends and (he trusts) to make new. His metamorphosis occurs at an odd time, marketwise. The Stock Exchange used to be such a touchy place, but is now curiously insensitive. Is the international political situation as obscure as ever? Is this country up against it, in financial and economic terms, as never before? Are we now budgetting for an 80 per cent. E.P.T. and a 9s standard rate, whereas before 26th July the assumptions were respectively 60 per cent. and 7s 6d? Do trading losses and reduced dividends now begin to appear among “transition companies”? It is, we are, and they do - and the net effect among prices is precisely nil. The customer, we know, is always right, and when he pays the piper he can certainly, in to-day’s conditions, call the tune. As Tauber has it: “Who am I to interfere?”

TRANSITION-AND BEYOND

There is a tantalising paradox in the fact that the companies who may well have the brightest industrial future are just those who may find the next twelve months most difficult. Beyond a shadow of a doubt, this country lacks the capital equipment to raise exports by at least 50 per cent. and to sustain full employment at home, withal providing reasonable comfort for its people. Our railways, our coal mines, our power stations, our telephone system, our textile factories - all these and more simply cannot cope with full employment. Their modernisation and enlargement should keep the capital goods trades busy for years. Yet - as recent dividend announcements show - transition in these trades is going to be difficult.

Because of the latter fact, it is going to need courage to buy capital goods and Engineering shares over the next twelve months. But the longer prospect should justify the courageous in taking advantage of any price falls caused by disappointing accounts and announcements.

Murex Prospects

An instance is Murex where the £1 shares on Friday night were just under £5 cum dividend to yield over 4 per cent. whereas before last week’s preliminary announcement the price was 103s 9d. Actually, the company is maintaining the 20 per cent. distribution (including 21/2 per cent. bonus) which it has paid ever since 1937, but the market did not like the directorial intimation that the parent company’s trading profit has shown a “substantial reduction,” due to the ending of the war.

Net profit, which has been assisted by tax recoveries, is only moderately down at £213,032, as compared with £239,446 in the preceding year. Since there are no debentures and only £50,000 of Seven per cent. Preference capital, and since the net Ordinary dividend at £100,000 takes only half the above profit, Murex should see transition through comfortably. The company’s services as metallurgists, smelters and refiners and welders should be in big demand again before long.

REZENDE

Rezende Mines 1s shares were a feature towards the end of last week, finishing at 9s 3d. The company is under much the same management as Cam and Motor, whose shares recently gratified holders by spurting from 32s 6d at the end of June to the present price of 42s, under the influence of favourable development results. There are hopes that Rezende shares may put up a similar performance, although, of course, it is not really a comparable proposition to Cam and Motor.

The company has two reefs, one a low-grade proposition, and market talk is to the effect that milling in recent times has come mainly from this Old West Mine. Any change in policy here would have important effects on profits: On top of this, recent development reports have made encouraging reading. Rezende nominal capital is only £66,000, which received 121/2 per cent. for 1944. For the current year, an interim of that amount has already been paid. With Gold shares so fashionable, Rezende look a promising speculation.

VISITORS’ GALLERY

The New York Stock Exchange has announced that it is opening its doors once more to the public. This is a most desirable step. I have found quite a number of people who would like to look round our own House to see exactly what does go on there. (Not much, these days!) “V.I.P.s” are, of course, taken on conducted tours, and the Council is anxious to dispel any impression that the House is a Holy of Holies in which dark and secret mysteries are performed. But with the present building it is obvious that not much can be done to allow the general public to get better acquainted with stockbroking. When the House is rebuilt, however, a gallery from which the public can look on is surely a must item. A cynical colleague suggests that a porter should be there to “frisk” those investors who are convinced that their brokers always buy above the best, and sell below the worst, mark!

LEX

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