Good cheer
JOHN BULL
The opinion polls may have been pretty un- kind to the Conservatives before the elec-
tion, but they seem to be making it up now. The latest poll comes from Business Opin- ions, who have been asking a number of City men what they think of the Govern- ment's handling of the economic situation.
Bearing in mind the proviso that what is good for the boardroom isn't necessarily always good for the country, it seems that the ninety-four partners and senior execu- tives in merchant banks, stockbrokers and in- vestment houses who answered the question-
naire, are feeling pretty confident. First, 68
per cent thought that further credit restric- tions are fairly or very unlikely in the fore- seeable future. Whereas before the election, when Mr Wilson was in power, 54 per cent of the respondents thought a major econ- omic crisis likely if not imminent, only 7 per cent now think that it will happen.
The Conservatives haven't actually done anything special to inspire this confidence- 59 per cent of the respondents thought that nothing had happened since the Conserva- tives came to power which will affect its handling of the economy, although the sad death of Mr Macleod did make about 26 per cent more pessimistic than they were. They weren't asked, perhaps fortunately, whether the appointment of Tony Barber as Chan- cellor inspired them with confidence.
Nevertheless, it does appear to be clear that optimism rather than realism is per- vading throughout. There aren't enough 'don't knows' to carry a lot of wejght. After all, the Government hasn't yet given much indication as to what it plans to do over in- dustrial _relations, yet only 10 per cent of those questioned expressed any pessimism at all over trade union opposition to wage and salary controls. Surely Clive Jenkins and Hugh Scanlon together can inspire a little more fear than that?
There is a strong body of corporate
opinion that feels the stock market will go up this year, and as many as 64 per cent be lieve that share prices will be higher at the end of the year than they are now (which shouldn't be difficult). If I were Mr Heath, I would be more worried about the fact that a significant 27 per cent expect the market to be showing no real change at the year end, The practical question which the well pub- licised troubles of Investors Overseas Ser- vices raises is what Dover Plan holders should do about their policies. As they know only too well, the company which issued the policies and which is due to pay out benefits in due course—International Life Insurance (uk)—is a subsidiary of ios. Many holders must be tempted to cut their losses or take their profits and run. What are the arguments for and against?
In the first place there is a cost in cutting and running. Insurance policies are expen- sive to arrange, though the customer does not always realise this. In the first year of a long term contract much of the premium you pay to an insurance company goes to- wards management charges. That is one rea- son against changing, but far from the most important. Second, the London operation of Investors Overseas Services is relatively im- mune to the spectacular troubles which afflict the Geneva parent. A statement from the company on Monday emphasised this point. It said that the company which runs the Dover Plan is controlled solely for the benefit of policyholders. It adds that no money is invested in los limited or los Man- agement stock nor in Fund of Funds (the most exposed of Los's international funds). You can go further. On the published figures, International Life Insurance (UK) is a per- fectly sound operation. Dover Plan is 40 per cent liquid and a further 12 per cent of its funds are in gilt-edged securities.
Yes, but. What if control of the parent company changes again? If disreputable ele- ments took over in Geneva could they not turn wi into a quite different and much less respectable operation? I doubt whether the Board of Trade would let this one through its fingers. So the answer is—if you have strong nerves, hang on to your policy. If you value your peace of mind, clear out.
ffolkes's investors' alphabet
E is for Eldorado
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