FINANCE AND INVESTMENT
By CUSTOS
ONCE again the City is becalmed. As I suspected last week, the recovery movement, which after all had carried industrial share prices almost to the high point of March, lacked driving force. At no time was it accompanied by any sub- stantial volume of public buying and, for the present, the professional and semi-professional speculative elements are content to hold off until some fresh political sign is vouch- safed. As always happens, the fade-out of buying has brought a setback in prices, because there must be closing of " bull " positions, but the reaction has been quite modest in most groups. Not unnaturally, gilt-edged have come off worst, for.the Continent is usually prepared to liquidate after a rise in prices and, it must be added, to open up to some extent on the " short " side.
The real trouble is, of course, political. Nobody doubts any longer that growing rearmament expenditure is having a stimulating effect on many—although not all—sections of domestic trade. The proof is there for all to see in the rail- way traffics, coal output, steel production, provincial retail sales, and other recognised business barometers. Investors and speculators are restrained in spite of these indications of business improvement, partly because they are not convinced of the solidity of the basis of economic recovery, but much more by the feeling that at some point between now and the late autumn we may have to go through another political crisis which will disturb security prices. I can only repeat that, in my view, investors who have surplus funds on which income is required should try to put politics out of mind and fill their requirements at current prices, since I can see no advantage in waiting. To the short-term operator looking for quick capital profits I need scarcely say that these, are times for caution.
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