FINANCE AND INVESTMENT
By CUSTOS
IT says a good deal not merely for the technical strength of stock markets but for the morale of investors that this week's political developments have produced only a trickle of selling. There has, of course, been some liquidation of gilt-edged stocks from the Continent and dealers have had to satisfy some few selling orders from domestic investors who have felt constrained to increase their liquidity. Add to this a fairly substantial demand for dollars against offer- ings of sterling in the foreign exchange market, and you have a pretty complete picture of the effects of crisis in the City. Naturally enough, there has been a complete drying up of buying, and prices have been adjusted downward as a precautionary measure, but nobody will deny that the behaviour of markets has been thoroughly satisfactory. Most investors have been content, in my view, quite justifiably, tc hold on to sound shares on the better 'ole theory. If the worst should happen, most equity shares (e.g., armament. metal, food, coal, &c.) should prove at least as good holdings as cash in the bank.
This is all very disappointing, I admit, in relation to the really encouraging news from the economic front. Rail traffics are definitely improving, and there is ample evidence of industrial recovery in the latest figures of tinplate, textile and motor trade activity. As things are, good news finds no reflection in rising share quotations, but does help to stiffen the resisting power of markets. I will not venture my fore- cast of political events, but it is clear enough that if happily the horizon clears the current level of quotations will dis- appear overnight. Meantime, investors may rest content that their attitude of stoical calm is not merely praiseworthy from the national standpoint, but is good business sense as well.
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