Depressed conditions again prevailed in most sections of the Stock Exchange during the past week due principally to apprehension regarding the new tension in Spain arising out of the bombing of the German battleship, Deutschland, and the reprisal in the bombardment of Almeria. A contributory factor adverse to confidence was the renewal of uncertainties over the gold position.
The dropping of the N.D.C. tax came too late on Tuesday to affect prices but it produced a quick response on Wednesday when jobbers marked up prices in view of the universal feeling of relief at the ending of an intrinsically had tax even if it were to be exchanged for another whose yield would be greater but whose nature would be more straightforward.
Although there was not a great amount of selling in evidence during the past week, the continued absence of fresh business was sufficient to cause a sagging tendency in most sections. Gilt-edged stocks showed a general decline during the opening days of the week, but have since been maintained at the lower levels. Home Rails were still influenced by the labour position, and lost ground on profit-taking following the advance of the previous week. Argentine Rails were lower for choice. German bonds have been a dull spot in the foreign section. Industrials were generally easier on the prevailing conditions, although satisfactory news of individual concerns influenced a few gains. In the Iron and Steel group, for example, John Browns responded to the dividend with a rise to 35s., while Smethwick Drop Forgings were also good on the 30 per cent. dividend. Stanton Iron fell for the opposite reason. Triplex were dull. Among other leading shares, Imperial Chemicals, Dunlops, Turner and Newail, and United Molasses were all harder on Tuesday. Breweries were unaffected by the good beer production figures. The Shipping group was slightly easier. Transatlantics have been quiet, but fairly firm. Among Oils, the Eagle issues have been depressed on the Mexican labour troubles, although the rest of the market tended to improve after moderate declines at the beginning of the week. Rubbers were unsettled by the dullness of the commodity.
Further doubts as to the future of gold caused weakness among Kaffirs at the opening of the week, although small support produced a steadier tendency on Tuesday. Most prices, however, are down on balance. West African gold shares were also depressed, and there was nothing doing in Westraliarts. Rhodesian Coppers eased on Monday, but have since kept fairly steady at the reduced levels.
A Steel Share
Recent market conditions have been most unpropitious for the appearance of new shares, and the new-corners of the past two months have had a dismal welcome. One of these shares which is particularly deserving in attention is the 4s. Ordinary of the Halesowen Steel Co., Ltd., privately " placed " on the market about two months hack, and now obtainable at about 6d. under the opening price of 14s. 6d.
This concern dates as a private business front 1908, and was converted into a public Company on December 31 last. It is wellestablished in the manufacture of " Bright Steel Bars,required for general and electrical engineering purposes, the manufacture of motor cars, aeroplanes, etc., and has good trade connections, besides being on the approved lists of the Admiralty, War Office and Air Ministry. Company owns ten acres of freehold land near Birmingham, and has ample room for the expansion of the works. The authorised and issued capital is light at L115.000, £15,000 of which is represented by privately-held £1 5 per cent. Cumulative Preference shares, the annual dividend on which requires only £750.
Although ostensibly dearly-priced, these Ordinary shares now yield about 7 per cent. on the basis Of the 1936 distribution of 25 per cent. Net profit for the past year ended December 31 last expanded from £24,385 to £30,513, which, after deducting Preference dividend, is equivalent to over 29 per cent. on the Ordinary capital. Moreover, the Company is well placed on the score of the N.D.C., since average annual profits for the past three years amounted to £26,970, or about 26 per cent. on the Ordinary shares. It was stated that a substantial increase in turnover was expected during 1937, apart from any increase in armament side of the business, and that orders for the first quarter of 1937 were considerably in excess of those for the same period of 1936,
A Coming Gold Producer
There has been recently a significant stirring among the dry bones of the West Australian gold shares, a movement that may gain momentum with any return of confidence in the precious metal. The shares of a number of the better We.stralian mines have for long suffered unfairly through the discredited position of the market generally, and are now obtainable at levels which warrant a revival to a more equitable basis. Probably one of the best opportunities in the event of even a moderate revival in this group is represented in the. Is. shares of the Paringa Mining and Exploration Co., Ltd., for which I have recently seen some heavy absorption at around 2s., the lowest price of latter years.
Now in its twenty-eighth year, the present Company have at last brought the mine to the brink of large-scale production, for which purpose a treatment plant is now in course of erection, and is expected to be completed some time in December next. Meanwhile, Paringa may be said already to have entered the profit-earning stage, since trial treatment has for some time been carried out by the adjoining South Kalgurli mine, total bulk crushed to end-November last being 5,962 tons, the average value of which was 9 dwts, per ton. The proportion of treatment during the Company's past financial year to August 31 last realised £9,404, which enabled a net profit of £3,497. Since then some 4,836 tons of ore have been treated. The profits from this source are of considerable benefit to the Company, being devoted to development, and thus saving working capital, which now amounts to £125,000 Australian currency.
The issued capital is £159,240, all in Is. shares, Ore reserves at the conclusion of the past financial year were estimated at 179,612 tons probable, and 107,660 tons proved, of an average value of 6.07 dwts. This is equal to at least three years' supply of the mill, reckoning an annual crushing of 50,000 tons, which is the initial estimate.