FINANCE AND INVESTMENT By CUSTOS How will markets react to
the election result? To this question, uppermost in the minds of investors, the answer will be known by the time these notes appear in print. To attempt a forecast so close to the event may seem an unnecessarily risky procedure, but a general assessment of the position may prove helpful. Two facts to keep in mind are, first, there is no over-bought speculative position on the Stock Exchange such as would leave markets vulnerable to bad .news ; second, that there is an abundance of money awaiting investment. The broad conclusion which seems to me to follow is that unless the election result is really " bad "—in the Stock Exchange sense—by which I mean unless the Conservatives fail to secure any sort of working majority, the course of security values will be upward. While I would not expect a boom, which from the current level of prices would be completely unjustified, money being held back would certainly seek employment and, on the now familiar selective lines, quotations would move up.
What if the ballot boxes contain a surprise and a Labour Govern- ment takes over? For a time markets would be depressed and only a little nervous selling would be required to bring a sharp fall. My guess would be that the average fall might amount to between to and 15 per cent. from the pre-election result level. On a longer view, however, I should be inclined to look for a gradual recovery. Invest- ment sentiment would be less confident than under a Conservative regime, and the capitalist-investor might well have less to expect in the way of tax-remission, but it would still remain true that money would be abundant, and industry would be kept actively employed in meeting enormous post-war demands.
MALAY RUBBER PLAN The Rubber Growers' Association is to be congratulated upon having formulated a plan for speeding up the rehabilitation of the Malayan rubber industry well in advance of the actual course of events. Largely the work of Sir John Hay, the scheme sets up a new company, limited by guarantee, which is to provide the organ- ising medium for co-operative effort on a group basis. All owners of estates of too acres or over, who together account for over two- thirds of the Malayan total, are being invited to participate, terms of membership being a cash payment of is. per planted acre and a banker's guarantee for an amount equal to Li per planted acre. Responsibility for taking care of the needs of the small holders of under too acres, who together account for nearly 4o per cent., has been accepted by H.M. Government. As might be expected, the Government has given its approval to this plan, the main object of which is to avoid a competitive scramble for the limited amount of goods and services which will be available to set the rubber industry on its feet in the immediate post-war years. To facilitate administration estate-owners are required to organise themselves into groups of not less than too,000 planted acres and, if desired, into sub-groups of not less than zo,000 planted acres. The scheme appears to be practical as well as ingenious and should command the full support of the Malayan plantation industry.
"JOHNNIES " RESULTS
Like most of the Kaffir finance houses, the Johannesburg Con- solidated Investment Company has built up a strong reserve position and has succeeded in achieving some degree of stability of earning power. For the year to June- 3o, 1945, the dividend is being main- tained at x5 per cent. and substantial sums are allocated to reserves. Profits, which rose from £831,969 to 4945,000, had the benefit of an unusually large adjustment in the taxation charge, but the board has dealt conservatively with the available balance, raising the transfer to reserve from 'L250,000 to 430o,000. Quoted at 725. 6d.
tfae Li shares are yielding only per cent. without allowing for Dominion tax relief. They seem to me to be fairly valued at this level.
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