1961-12-28 — Page 2

GEARING

THE CHINA MAIL, THURSDAY, DECEMBER 28, 1961.

THAT'S

THE SECRET OF SOUND INVESTMENT

By

Cass Robertson

London, Dec. 27.

Investing in shares is rather like driving a motor-car. If the investor goes too slow, he might just as well get out and walk. If he goes too fast, sooner or later he will hit some- thing with a fearful bang.

Most investors plainly understand when they should apply the brake to their activities, and when they need a touch of the accelerator.

But driving a car merely on these two controls can give a very ferky ride. And it is exact- ly the same for the investor.

Yet there is a way in which he can help to smooth out his Journey between the constantly the Stuck changing lights of Exchange by gearing.

Gearing your investment port follo works in exactly the same as the gearing of your car. way as It can be either high or low.

If the economic going is rough, your portfolio will do better if it is low-geared, But if the flu/ abcad looks smooth and straight, then you will get along

nore prositably in high gear

Risk-carriers

You can build up a high-gear- ed portfolio by concentrating on Buying Ordinary shares. As Ordinaries Arc the risk carriers of investment, they tend to la much more volatile than fixed-terest stocks, much B Preference shares and Deben-

tures

Sv when times are good you make more money out of Or- dinary shares than the others. markel setback But when

comes along your Ordinaries will tend to slump much more quickly than your fixed-interest shares.

But there is another level of gearing that is perhaps even less understood by the smalt inves tor. Not only can his sprean of investments be geared to suit his

AMERICAN

STOCKS & COMMUNITIES

WHEN SELL

WHEN

BUY

TECHNICAL

ANALYSIS

On Stock Trends

Research Dept. PERENNIAL

TRADING CORP.

816-818 Edinburgh House

Hong Kong Tel: 24946, 364

THE

i

tastes, but every individual Or- dinary share it contains also has an element of gearing.

It always pays, therefore, to have a close look at the capl- tat structure of any company before you buy its shares. Some companies have a large slice of

of their capital Issued in the form of Debentures or Pre- ference shares. These companies are

high-geared.

When profits are falling they will have to fork out a large proportion of their earnings in interest payments to the holders of their priority stocks. So there will be less left for the Ordinary Khare-holders

of a high- A good example geared company is English Elec- iric. Recently Lord Nelson, the chairman of this massive group. announced that this year's pro- fits would be apprecfably lower than those for 1960. He hinted that it may not be possible to pay 10% dividend on the forecast

the Ordinary shares.

Not surprising

And when you look at how much English Electric has to pay in interest, this is not very sur- prising. They have £23,767.000 issued to Debenture holders, and at the time of the last balance sheet they owed nearly £24,000- 000 to their bankers, which, I reckon. could be cost- ing them as much as £2,300,000

year in interest.

All of

And then before any of the £30,000,000 of Ordinary capital qualifes for a pay out, there are of dividends on the £2,635,000 Preference slock to be påld off.

ng now 10 S Smith & Sons England), the clock and instru- At present only men: makers about an eighth of the money they use is in the form of fixed- interest capital. But now ther have decided to gear-up be in Preasing this proportion of prior charges when they raise further capital instead of issuing new Ordinary shares

in- How should gearing

in his floence the investor choice of shares? If he wants a fast and dangerous ride he will stick to high-geared com- panies. If he prefers a slower but safer

will journey. he change down.

But & lol depends on current economic and trading conditions. And when the outlook is uncer- ain, he would do well to keep away from any Ordinary shares that have high proportion of

ixed-interest capital ranking fore them. London Express Service

THE BALTIC

EXCHANGE

London, Dec. 27.

the Christmas Following

holiday, the treight market on the Baltic Ex- change has resumed its pre-holiday trend and

Gulf grain fixing domin- ated the market.

Gulf charterers were engaged largely in fixing grain to Egypt and Algeria.

Brighter year ahead for

U.S. textile

industry'

New York, Dec. 27. The American textile indus- try is looking toward 1962 with prospects of steady

Advances made Gains may signal

in slow

trading

Gains took the upper hand in slow post-holiday trading yesterday and industrial stocks closed firm.

employment and improve-LONDON

ment in prices and pro- fits.

pro-

crawl

Mr. R. Dave Hall, President.

Business shortly before American Cotton Manufacturers

bell floal

moved at a Institute, in an end-of-year re- view and forecast in Charlotte. When a power failure cut Of North Carolina, said the the market's lights, mise of a better economic situa- Engineering and

electrical tion for the industry is calcu- groups advanced and, among lated on the recent turnabout the stctes, Woolworth forged of the nation's general economic head in advance of results condition, and a realistic solu-, due next month. Cotton tex- tion of the industry's import tiles were a two-way ffair. problim,

British Petroleum made a The potential displacement weak spot in oils on worries of US textiles by imports," Mr over Kuwait while Lobitos fell Hall said

"creates uncertainly way to 14

shillings and clouds the domestic mili tax imposition. outlook for 1962 for steady and continued textile upturn.”

However, Mr Hall added, "There

1s some

hope that the velopment news uncertainty can be reduced by at least two factors:

?

Current ncg tiators in Geneva among principle texte producing and centiming na- tions, and

2. A hearing scheduled to be gin on February 13, 1962 Before the US. tariff commission "

Increased cost

Peru's

Australian Oil and Gas leapt to 56 shillings after good de-

Exchange rates

10

Gilt-edged were aimless and ended without quotable changes. Banks Armed ahead of their dividend season but, in oversells- banks, Hongkong and Shanghai lost 14 To £18

Foreign bunds had a lifeless day

Tins proved the only improved sector of the mining market where

Lower golds drifted through neglect, coppers showed le change while, in diamonds, De Beers lost ground,

Plantation stocks idled-UPI. Closing prices

FAFER GOVT SECS 25 Consol 373 Bowater 3% Con

44/-

end-of-year rally

The market made a fairly vigorous advance yes- terday in, what Wall Streeters hoped was, the start of the usual end-of-year rally

YORK

Galns of key stocks went

from fractions to $3 or more, specially-situated

issues

did

and

better, Hercules Powder ran un $4 on stock split news Campbell Soup $4% dividend rise.

Scattered losers appeared in De La Rue 53/3 51-15/18 Spicers 31/6. Various

groups and the TOBACCOS

aerospace Stocks showed mostly 67/432 minus signs. Selected 90-11 Carreras. 8/10/

chemi- 02/8 tals,

geels, motors, utilities, 16/rails and drugs accounted for a

BAT

93 13/10 MOTORS

BANKS & INSURANCE BATC!

HK Bank

Chrysler

Cit Berv

Coca Cola Colgate

49% Ohio on.

sa Olin Math

103

Paci Gas

B234 Pan Am Comen Edison 45 Paramount

Cons Edison 02 Penn AR

Cont 01

Com Prod Crane Co

55 Pepsi Cola

GOTA

POET

5814 Filter, Chas 501%

802 Phelps D

Crown Zell 59

Curt Wright 18 Dist!!

52

Philip M

61.

107

Philips Pet,$0. Pure Oll

85% (NJ)

37% (Ohio)

51

G8 682

42%

Douglas Air 30

Quaker Oats B

Low Chem

73

Radio C

on a

DuPont

2461

Raytheon

East Air

E. Kodak

Food Mach

Ford

28 110

1281%

Repuh St

50%

84%

Reynolds Met SP Beynolds

Tab

Si. Sav

Gen Dyn

27

Ryl Dutch

55/65

Gen Elec

14

st legis

60/65

Gen Mills

34

SeaTA Roc

Shell

68/75

Vi Impe

1.

4. Vic

Gen Phone

29

Gen Motors Shell Tspl

3812

BMC

War

Hawk Sidd

227

O'SEAS BONDS

Jaguar

120/41

It

545 Australia

R Rovce

30/3

1977/30

883

57. Bawes

6%. Jap, Asp

98

Bildford

TEXTILES

goca part of the rise. LAT

was the first clear-cut market advance in ten sessions,

Georgia Pac 50%

Sinclair

Getty Oil

Socoby

38 516

16

S. Am Gold B

Gillette

55

Goodrich

S. Cafte

72

13/0

Calico

Coats (JP)

12/1

41/3 in

183

Court-

the list was mixed at the stari but prices improved gradually 10 the afternoon.

Extoon

$35

Goodyear

43%

Grace, WR. B3

South C

#3

Gute of

Sperry Rand 28

423%

gaining

Ingersol

IBM

682

Fine Spin

23/5

Lati Hary

87/- Lanes Cott

40/6

Inti Nick

Chart Bk

Guardan

53/9 BREWERIES

5 Distil

37/7

Business was done in the

exchange unofficial

market morning of the following rates I dollars per 1)

local

this

Landel

15/

Kaiser

32

Texaco Inc 576

+ Lloyds

108/3

Kenaccoti

63

Thomp Rama 605

6.657

Lib Owens

58

Tidewater

15.80

Nat & Grind 22/

Gusste

57

Liggett

108 20th Fox

3514

12.50

PINI

Gussies A

64/3

Lockheed

47

1.51

Lone Star

8.50

Ryl B Can

287t Fraser 40/1

Lorillard

03

LA

Ryl Ins

46/412 Lyons A

12/7

1.20

OIL

M Spen A 101/4

5.30

Brit Pet

33/3 Tate Lyk

4.40

Butmak

32/ Utd Drap

47/9 4973

20% n Pacific ZBLZ 51

Utd Aircraft $215

244

9.00

Chinese JMP (per 1 Tatwan yuen (per 100 Thai baht (per 100) Burmese Kyat (per 10). Pakistan rupee (per 10 Macao pataca (per 1, Norwegian krone (per 18 Philippine peso per 1) Singapore Straits (per 1

0.33

Shell T

1.29

Ryl Dutch

Ultramar

20.50

5.85

7.75

B'maker

elip CPR

420/70 ontworth 52/4

12% 23/7

219%

MIST.ANEOUS

20

05%

Brl Comm-

12/416

20/3

An estimated $3,900 million was added to the quoted valuë

US Smelt

30%

63% 0.9 St

442

New

Nat Bisc

€7

Warner Bros 83

0.970

Nat Cash

139

West Un

7.70

Colvilles

1,26

D Long

46/1 City LAIN

Nat Dairy 70

Westghs El

1.81

G Keen

131

H Wolf

8/3 Forestal

25/ Cunard S

10

B/9

Netherlands guilder (per k

154

Slew

13/10% Furness w 20/41

HK GAS

23

West Gennan D-Mark iper 11 Cubo peso (per 11.

140

Lloyds

37/2

0.80

4%

Tube Inv

Vick Steel

39/9 Lan See

62/6 Indo-China

15/3

on the rise in the AP average. It was the sharpest advance since November 8 when average rose 2.80.

27

the

32/8

28/4

The Geneva negotiations are Sterling notes per T

a med at bringing skcal world-Australian notes iper £1

Japanese yen (per 1001 wide orderly marketing

Cambodia "riel (per 100)

Brazilian cruzeiro (per 1001 Argentine peso per 300 Kotean hway (per 1001 Italian Ka (per 1000]

Textiles, bod Are part of a cen-French new frane (per 1) firing stries of conferences nast summer by the U.S. Meanwhile, Mr Hail addee, the increased

U raw etto nus be covered before a widen ing if profit margins can occur. Alth, ugh no icoon is antici-

in walk

texlite plant zmí equipment spending, the ACMI

chief said such outlays "are ex-Swiss frane (per li pected in be steady in the numath

head."--UPL

STEADY AND

ACTIVE

Of course, when profits are rising, the Ordinary shareholders stand to gain by this type of The axed- capital structure The Interest holders are only entitled to the some amount, no matter how high the profits are. So when a company has done well, the Ordinary shareholders in a

company will get Monarch was fixed with 10.000 The post-holiday activity continued on the market high-geared

bulk wheat fron fatter dividends than those loans

Columbia to China at British For A low-geared company.

This was 7/6 above there are fewer of them to share 28/6

rate last paid for similar busi- int the spoils

ness on July 8.

Not many big companies, of course, are as highly geared as English Electric But if you look list of them you will down

And all sorts

#

lower gearing.

Some like

manufacturers.

On the

of

Pacific the Celtic

this morning with interest well spread on the

list of stocks.

Thi

of variations of

pretty The time charter section was although a few counters were

fractionally lower quiet

Hampton

Roads to Lisbon Hai Min. 2,500

tons, 10

per January 5/12. 34, vent, coal. with 1,000 discharge free.

Prices

were

steady.

New

compared

with yesterday.

Tram

The morning's turnover about $3,570,000.

was

Rovers the car

105 Gulf have no gearing

Antwerp-Hamburg

a! all Ali their £5,000,000 range, Busna, 10,500/11,000 tons

capital

shares

issued

In Ouitmary

Others change gear as they go long This is what shop=

March/May

January grains 12/27. $5, option Antwerp Rotterdam or Amsterdam dis charge 25 cents less, with 3.990 discharge free-UPI.

DRAGON PEOPLE

Intimate glimpses of our community captured by the inimitable camera of Frank Fischbeck.

50 Pages of magnificent camera studies portraying the real Hongkong

on sale at the offices of the South China Morning Post at 1-3 Wyndham Street, Hongkong and Salisbury Road, Kowloon:

Steady shares included Wheelocks, Docks, Lands and Electrics.

b2 $2.05 Ewe 500 m 2 10000 @ 2.023

bil 042

2004219 500 à 421 500 42 50043% 100 @ 42

.b75 S70

Bus

Those

slightly lower in- cluded Lights, Taikoos, and Banks.

390 € 7. 3520 151 Yaumati b120 s328

HONGKONG

The morning's quotations and prices were:

Bank b342 5361 Talkou b74 875

140 362

$70 (1 384

180 362

Lan. Reg

1226

Lombard 14

Einv

B2125 621.20

A lov, 18.90 30.10

1000 21.40

1500 of 21.60

3007412

C. Prov 629.70 630 Hotel b44% $429.

1400-67:4

b76 6752 1000 7515 57@75

Land

74:10 75%

1000 75% 1400 75%

Wharf b360 $370 P. & P. $29.00

W lock b12.20 12.30 Realty b3.15 62.175

Dock

10 12.20 1000 & 12.30

$140 a147 1200 & 147

2000 @ 2.15

1000 2.175 3750 & 2.16 1000 @ 2.173

1000 128 1900 127 200 € 127

b39 40 200 $40

500 @ 30%

b3915 5304 11658 30%

Light

HK Flec

Phone

Old

434 643%

200 cm 4633 2004312 1000 Gr 4310

300 @ 43%

2000 434

Cem

150 @ 23.40

100 2316

300 6 93.40

oulds 39/1035 | strength as more cash caine in

from the sidelines.

18 Guinness 50/3

57 Ind Coope

67/5 Watney

Lombard 12 STORES

Of 1,316 issues traded, 637 ad- vanced and 448 declined. New highs for the year totalled 12 and new lows 13.

The Associated Press average of 80 stacks rose 2.70 to 262.20 with industrials up 4.50: rails up 1.50; and utilities up 80. The Standard and Poor index closed at 71.65 up .63.

Volume rises

Intl Paper

Int & T

Stand Brods 79%

8G5 Standard Oil

(Cali) $4% (Ind)

Ster Drug

Janes Laugh 741 Studebaker 10%

Martin Co Merck

TWA

231 UN Carbi

Union Oj 67% 游艺

Vid Airlines 381

Utd Fruit

Minneapolis H US

Min Min 4914 US Lines Monato C 54

Mont Ward

339

Moore McCar II

Motorola

US Rub

"A" 25 0/10 House

STEELS

ENGINEERING

Bab WI 20/6 Channel

Summers 43/10 Hudson B

Vickers

ELECTRIC

Ass Elec. Age Tel Brit Ins EMI Enx Elec

GEC Philipa

: Rediffusion

27/9 P&O

MINER

Anglo US 20/8 Brit Sth

32/6 AI

Ass Cem 64/4

Boardman

29 of 5 orks listed on the 78/3 York Stock Exchange, based

138/8

Volume swelled to 4.17 mil-

on shares from 3.18 million shares on Tuesday and was the largest since December 14 when 55/6 4.35 million shares changed ite hands.

The Dow Jones Industrial Average gained 8.34 at 731.43.

$5/9 Brit Tin

44/46 Cabs Zinc

4970

26/3

23 De Beers

140/3

15/10

10

Mt Isa

15/9

INDUSTRIALS

Petaling

55/3 9/0

Stand Set 45/1033:

Rhod Anglo

15/9

US

86/3

77/9

Rio Tinto

426

29/-

Roan Ant

9/1036

Union C

25/6

59/1

4/

Welkom

19/3

48/9

129/9

301-

had

Borax

Drea Fans

Dunlop

Gliman

Inl Comp 108/6 West Rand

Tum New $1/4 West Hold Unilever Wiggins

S Mu? 49/- 50/3 RUBBER & CHEMICALS TEAS Boots

29/3 Anglo Indo, 3/10% ICI 5871 Cosion Tea 11/4 300 23.40 Monsanto 1674 Imp Tea 500 23.40 CINEMAS TY

KL. Kepong 2/9 Assoc Pix 23/4 Lainbak · 44/412

-Reuter. Stall

8/715

509 670

500 890%

sub a 70

1500699

500 69% 2500691

Dairy 636% 36%

100 € 37 2000 352

Watson b59 Text 55,70 15.00 N'yang 610.30 A Rubb

65.06 65.10 1000 5.05 1000 75.05 K Trust

b8.20 28.40

U. Water-

boal b30

S Ferry 1044 5248

100 243

GOO 244 300 244 Metal 35.05 $3,10 10033.025 7500 3.05 105 41% Vibro 11

500 10.20 Console.

New 41 41

73 64 423

1004115

99 43%

Gas

2004+ 41

1242 400

C Hotel 13715 320.00 820.79 Huo 629 20.40 1500 @ 20.30 L, Craw 13T

200 20.30 A Nav

600

$3.50

I Inv b12.30 20.30

300 20.70 Macso

500 @ 20.60

Gilm

613.50 14.40 b3.925 3.95 Indo China

(Defi

s14

€000 € 3.95

2000 305: Amoy 155

New York

sugar

New York, Dec. 27. World No. 9 sugar futures today closed. two higher to one point lower with sales of five contracti. World No 8 sugar fitures closed unchanged to one point higher with

tracts.

sales of 38 con

Domestic No 7 sugar closed one to three points higher with sales of 103 contracts.

The situation was described

Business news and econo- mie forecafis continued good, the but what really sparked rally, analysts said, was the fact that, the bulk of end-of- year profi-taking and switch- ing seemed to have been disposed of.

MGM

Nat Distil

Nat Gypsum 50

Nat Lend NY Central

179%

Northwest 314

X9 3815 Yale Towne 27

Youngstown

Sheet Zenith

30214

71

—AF & UPI.

New York

cotton

New York, Dec. 27. Cotton futures today deve-

loped more activity and a stendiër tone after a quiet and mixed start. Aksellis Liquidation hampered, ralix- In the nearby The bullish atmosphere also ing tendencies

from news

that spot month, but later deliveries support

was at the edged up to gains of $1.25 a baie steel production highest level, since April 1960 with the July, delivery leading and that November construction the way, contracts were

was three The final range was thre were at a peak. The

lower to 19 points higher. The General Motors pre-

market opened five higher to be a 1882 would that

15 points lower. New Orleans also closed off 31 to up 10 pointy, The best part of the rise was

Traders reported a moderate accounted for by selective gains amount of switching between

chemicals, steels. among

ralls, old, crop March and May motors and utilities. Aircrafts around 95 points difference by were mostly lower, Scattered trade and commission house losers

appeared in various brokers.-UPI groups-AP.

head

dicted

of

seven-million-car year.

Closing prices

ACE Inds Air Red

Altteris

All Chem

All Mins

All Chal Altem Lid

367

Ampex 644 Anaconda 76 Armod

5414 Armour

412% Bald Lima

Balt Ohio

Alum Co Am 85% Beechnut. Am Air Am Brake

Bendix Am Cyan-Bengust

472 Ben Fin

Am E Pow 68 Beth Spl Am & Fore Bhaw Knox Amir Mack **Boeing Amor Metal the Aim N Gas

as routine and featureless as traders looked ahead for year-end holidays.

Am Photo

Am Strickt

Am Sugar

unm

Am T&T Am Tob

The world and domestic raw market

was dull and changed-UPI · · ·

COMMODITY PRICES

FOREIGN EXCHANGE

NEW YORK

Closing tates Canada 85 31/23: England official, 2.8095; England 30- days 2.8028; England 90-days 2,7810: Australia 2.7995; W. Germany 2500) Sweden 1932.

LONDON

Lead Spat Bayib, b8; 3-month 611b, 6145.

Zinc Spot 71%%b; 71%; 8-mar 7b, 73.

SUGAR

NEW YORK,

Closing prices, all in peits per tb.: World No. 9; Mac, 241; MU 352: July 281 Sept. 263, Oct. 2,82.

Spot (Lo.b. stowed)" 235. Total Sales: five conizāchs Open interest: 377 pontracte, World No, a (world); Mar May 1.55; July 2.70: Sept. 2.10: Det:

Closing rates; Montreal 2.0274-2.00; Ainsterdam 15.11-10.1182R Brussels 139.85-159.90;. Copenhagen. 19.00- 19.2076 Frankfurt 112314-11236 Lisbon 830-80.305 Oslo 20.015-20.01; Paris 13.701-13.78%5: Stockholm 21. 14.3518-14.6541 Milan 1742-1743 Zurich 12.1236-12.124.

UPL

Spot-fo.b. slowed) 2(3 Total Sales: 28: cantsda Open Interest: BID contracte Domestic No. 7 (Gomeri

6:34, May 6.30 July

Bob Bulky duty.

Total Sales! 103, con

245

1.40.

Open Interest: 14ze conducta—UPI;

PRICE $15.

postage to the UK. and Kursos 38.44; to the USA. 1615; Losi posluze 35.66.

METALS

NEW YORK

Close prices all in cents per Lead Juu.B.25; MAT. 9.3BARİZİ

zine Jan, 2005; Mar:

Cupper Jan, 2000; Mar, 20.00/1 30.30 Jutthe 10:13: July 15; 90.30;6 BEDI J-21; Dee! 30.28 JAN 30.207:

LONDON:

Clowing pricdk, ili in stirling.pars

COTTON

LIVERPOOL

Closing prices all in pence per

Ib.:

Mar: 24.85:1 May

Afkerican Contract:

25.3509

Oct. 2483; Dec. 24.85:11 Jan

Mized Contract: Des.

RUBBER

WON NEW YORK

Buzber futures closing prices, 11

July 28.25:SITE.

MASASINGAPORE

Closkur prices all in Straits centi Þer 1 Lada Melayan“ porte: No. 1

„Epót: ribbor

383, Burden

46 BoraKI

344 Burroughs RCPR

2015

6022

06 61

$122

21

UNIT TRUSTS

at

First Hongkong Fund: - $1:15 (buyer) $1.23 (seller); Pat

Second Hongkong Fund: Bi cents, (buyer) 97 cents (seller),

AGREED RATES

Swiss Francs, Maximum Sell- ing, 75-3/18.0

Belgian Francs, Maximum 25% Selling, 865.

9524

Case, Co 136% Celanese

100% Gerre Corn 314;

West German Deutschemarks, Maximum Selling, 89%.

ور پار