FINANCE—PUBLIC & PRIVATE.
[By 0178 CITY EDITOR.]
OPTIMISTIC MARKETS. -
[To the Editor of the SPECTATOR.] SIR,—At the moment of writing somewhat conflicting factors are operating on the Stock Markets, and price movements are correspondingly irregular. The rally in British Funds and investment stocks is mainly to be accounted for by the anticipation of a reinvestment of some portion of about £30,000,000 in Government dividend and bond payments due early in October. This influence is of a somewhat temporary character, and it may be doubted whether by itself it would carry investment stocks up far, the general opinion in the market, as I mentioned last week, being that, on the whole, they are high enough. In the more speculative departments, however, there is a distinct tendency to search for fairly promising shares offering prospects of good dividends or appreciation in capital value. It is for this reason that Nitrate shares in particular are commanding attention, the statistical position being better than for some time past, with fair prospects of a continuance of demand for nitrate. Another direction where intrinsic merits have on the whole justified activity with rising prices is in the market for Tea shares, though it looks as if the upward pace had been forced rather fast. A few of the leadinglndustrial concerns have also improved a little on hopes of a revival in trade. Moreover, some of the . industrial reports published lately, including Nobel Industries, the Partington Iron and Steel Com- pany, Pearson and Knowles and Frederick Hotels, have been of a distinctly encouraging character, Turning now to the broader influences as represented by the political outlook in Europe, it may -be said that during the past week'the successive cables from Germany showing unparalleled currency chaos have, in a sense, acted favourably upon markets. In other words, they have been regarded, rightly or wrongly, as indicating the impossibility of Germany continuing passive resist- ance in the Ruhr, and that view would, seem to be justified by the cables arriving at the moment of writing stating that Germany is to " surrender unconditionally." Moreover, markets were strengthened to some extent in their optimism by the remarkable rally in French and Belgian currencies during the week, the movements being regarded as indicating French views as to the likelihood of an early termination of the Ruhr crisis, with closer co-operation between France and Britain. Inasmuch as political affairs will probably have developed materially before my letter appears in print, it will be better that I should indicate the probable effect of certain developments upon markets than that I should speculate upon their probable character. If it should be found that the abandonment of passive resistance by Germany means a drastic modification of the terms of occupancy of the Ruhr, and combined action by the Allies along lines likely to result in a real settlement of reparations by voluntary consent on the part of Germany, there is little doubt that the first effect upon markets would be to occasion a moderate rise in almost every department. I am inclined to think, however, that it might soon be followed by a reaction in the gilt-edged group, simply because the tendency would be to anticipate a revival in inter- national trade, and consequently there might be a _ disposition to realize gilt-edged securities with the object either of employing the proceeds in trade or even in securities of the industrial concerns most likely to be directly affected by any trade revival.—I am, Sir,
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