Market report
CUSTOS
Equities collapsed on Tuesday. Fears • of a further dose of credit restrictions (at the behest of the International Monetary Fund), poor trade figures and uncertainty about the chances of useful trade union legislation reaching the Statute Book were three blows to confidence. At one point the Financial Times index was 16.8 points down, but a late rally reduced the fall to 11 points (the close was 428.5). Thus share prices have fallen by 174 per cent since the peak reached on 15 January this year. Most of the selling has been by private clients rather than institutions. Greed brings them into the market (often at high prices), fear drives them out (near the bottom more likely than not). This exasperates the professional, who hates to see the irrational in command, but without the pri- vate speculator how would he make his money? When I say professional, I do not refer to the institutions. Although they rarely ditch stock in panic, they are not, on the other hand, the first back in after a fall. They prefer ti) let the public and the professionals back first.
Gilt-edge securities remain in deep trouble. Dealers in this market take talk of a tough credit squeeze to mean that the clearing banks will be asked for special deposits (which would mean bank selling of gilts). The trade figures unnerved them further—not to speak of the rise in American Treasury bill rate and the suspicion that London Bank rate could rise this Week.
Outside Thrognioiton Street the event of the week has been, the upwards revision in the terms of Ransome and Marks bid for Pollard Ball and Roller Bearing. Despite IRC backing there was a great deal wrong with the first proposition. It remains a pity. that Pollard share- holders are not being offered any immediate equity (cash or an unattractive convertible in- stead), but at.least the terms of the Ransome and Marks deal with Hoffman have been spelt out. The moral is that when the IRC persuades companies to make bids which they would not otherwise consider, the terms will often look unattractive. In this case Ransome and Marks ii only able to proceed because it has arranged a cheap medium-term loan from the IRC.
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