FINANCE AND INVESTMENT _
By CUSTOS
THERE may be some disappointment but there should be no surprise that the flying bomb has put an effective check on the rise in the stock markets. It is not that there has been any rush to sell— jobbers would welcome offers of. good stocks—but the pressure to buy has temporarily subsided. Again, the disinclination to buy is not due to any re-assessment of the war outlook, which is regarded more hopefully than ever, but to a natural unwillingness to open up fresh commitments in a period of uncertainty. There are, of course, the specific factors affecting property and amusement shares, but even in those groups the immediate adverse influences on prices are almost counterbalanced by the longer-term prospects, and quotations are showing only trifling falls.. While I agree with those who are saying that yields on leading industrials are already low enough, I cannot help thinking that once the flying bomb has been mastered the weight of money awaiting investment will again set prices on an upward course. Already the gold share market is trying to shake itself free from lethargy, although the initiative in this group comes not from London but from Johannesburg. I do not think the time has yet come to sell.
NO RAIL REVISION
While I have always supported the view that in equity the railway companies had a good case for an increase in their annual rental from the Government, it has seemed to me unlikely that any upward re- vision would be conceded. The railways' case was put with con- siderable skill, the appropriate emphasis being laid on the vast acces- sion of traffics which has resulted from the entry of the United States into the war. As everybody knows, so substantial has been the increase in gross receipts during the past two years that very large sums have accrued to the Treasury as surpluses over the fixed rental paid to the railways. Nevertheless, the Government has not seen fit to alter its view that the agreement is a just one, and accordingly there is to be no revision of the rental payment. As for the question of abnormal wear and tear stressed in the railway chairmen's speeches earlier this year, the Government acknowledge their responsibility in this matter, always provided, of course, that proper evidence is forthcoming that abnormal wear and tear has been incurred. There, for the moment, the matter ends, and any hopes that may have lingered in the breasts of railway stockholders that something more would be forthcoming during the war period go unfulfilled. As I have often emphasised here, there are more
important problems than the rental affecting the valuation of railway stocks. It would be of far greater advantage from the stockholders' point of view to get some assurance, for example, as to the future relationships between costs and charges.
OVERSEAS BANK PLAN
It seems a little odd that the announcement by the British Over- seas Bank of a plan for tidying up its rather unfortunate affairs should' have provided the signal on the Stock Exchange for a slump in the £s " A " shares from 3os. to los. Whether the shares were, in fact, worth 3os. before the new proposals were announced is open to doubt, but it does seem that whatever the " right " price was a week ago the " right " price today should be something more. Part of the plan is that the Special Depositors who comprise the banking consortium which helped out the position early in 1939 cancels claims ranking ahead of the shareholders for £3oo,000. That must improve the prospects of the " A " shares. Another feature of the plan is the transfer of the control of the frozen assets to Continental Assets Realisation Trust, a body which specialises in realising Euro- pean debts. What the ultimate value of the shares will be is any- body's guess, but the figure of £toopoo implied in the current market price of tos. seems an unduly pessimistic estimate of what assets will fetch carried in the balance-sheet at L2,000,000. Share dealings are at the moment practically at a standstill on a purely negotiating basis. If and when business loosens up it seems likely that the shares will move to a higher level_
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