The equity market has had a nasty little tumble this week, falling back 3 per cent to 502 on the Financial Times ordinary share index by Tuesday night. Three bear factors made an appearance over the preceding weekend. The first, the threat of new credit restrictions, I do not take too seriously as far as equity prices are concerned. Each turn of the screw is thought likely to produce forced selling of shares but in practice rarely does. in any case. I read the clearing banks' reply to the Bank of England's fresh exhortations as—`sorry, chum, we told you we couldn't do it, and we shan't.'
The second bearish influence is a traditional one at this time of year, the fear of what the forthcoming Budget will bring. There is always concern that corporation tax will be raised, and indeed, if it were, which is unlikely, share prices would come back fast, property and in- surance companies being particularly vulner- able on account of their thin dividend covers.
Thirdly, the Financial Times's monthly sur- vey of business opinion suggests that industrial investment is refusing to expand—though I think the signs on this front are contradictory. So in sum, I believe that the equity market has only paused in its tracks. This is not a moment to ditch good shares.