Trooping through The Netherlands last week went 78 American tourists whom most European businessmen were particularly anxious to impress. The tourists were all members of the New York Society of Security Analysts on a field trip to see whether European securities are a good buy. Conclusion after touring 37 companies in five countries: definitely but for sophisticated investors.
U.S. investors have been stepping up their buying of European securities for the past six months. The largest single stock purchase by 26 major U.S. funds in the fourth quarter of 1958 was the holding company for Philips' Gloeilampenfabrieken, the G.E. of Holland. So many orders are going into London from the U.S. that at least two London brokers are keeping their trading desks open until 8:30 p.m. to handle orders to buy British securities. The Frankfurt stock exchange, which closes before the New York Stock Exchange opens because of the time difference, is thinking of reopening later if U.S. transactions get heavier.
The traveling New York security analysts were looking for cheaper buys than exist in the booming U.S. stock market. Though European prices have risen sharply in the past six months, stock yields are still higher and price-earnings ratios lower than in the U.S. The analysts found plenty of reasons why U.S. investors need to be sophisticated in buying European securities. Tax laws and accounting systems differ; dangers of nationalization and freezing of capital still lurk in some countries; many European companies have yet to adopt the U.S. attitude that the stockholders have every right to look at the books. In Leverkusen, West Germany, the analysts spent two futile hours trying to get profit and sales information from reluctant officials of the big Bayer chemical company.
Some German businessmen were openly cool to U.S. investment. "American stock purchases overseas," said Georg Bruns, manager of the Frankfurt stock exchange, "often have a speculative character. We need sound, long-term support from .our shareholders. Also, Germany must export capital to rid itself of high currency reserves. There are already not enough shares to meet demand."
While the Germans are not eager for U.S. capital, most European companies (such as Britain's Imperial Chemical Industries, Holland's KLM) rolled out the red carpet. The analysts liked Holland and Germany best, particularly their electronic and chemical industries. France and Italy, they said, have too much government interference for most U.S. investors; Britain is suitable except where nationalization is a danger.
Wherever the analysts went, they left a wake of rising stocks. Almost all the companies visited rose as U.S. and European investors anticipated the analysts' reports. Britain's Edwards High Vacuum climbed 58% with the visit, and Germany's Siemens & Halske went up 5 points just ber fore the visitors went rubbernecking through a Siemens plant.