26 MAY 1939, Page 50


WE are back once again to convalescent markets in the City and there is no doubting the patient's will to recovery. Every day that passes without any shock from the political front is a reinforcement to hope, and although everybody realises that there is still a risk of another breakdown, the patient has already reached the stage when he can go out for short walks. So far, the recovery in markets has reflected only a very modest resumption of buying, but it is obvious from the extent of the rises in quotations that sellers are virtually non-existent. " Bear " positions are being closed—in most groups this process must now be practically complete— and there is plenty of evidence that jobbers have little stock on their books at current prices. So the rise goes on under the pressure of very light buying.

Even the most optimistic political prophets would scarcely argue just yet that the war risk can be ignored, and I shall feel more comfortable when an Anglo-Soviet pact has been signed. The fact remains, however, that the in- vestor's morale is improving and that the resigned despair of a few weeks ago is giving place to a cautious hopefulness. It is good, in these conditions that the authorities should have seen fit to give the gilt-edged market, which has been in the van of the recovery movement, an opportunity to try itself out. Its first hurdle—the Li,000,000 Sydney deben- ture renewal operation—it has taken in excellent style with- out a moment's hesitancy, and there is no reason to doubt that the second hurdle although much stiffer, will be negotiated without much difficulty. A L5,000,000 loan for South Africa is reminiscent of the City's better days. Perhaps before very long we shall have the first instalment of Defence borrowing. * *