Chilly days for David
WILLY had a purple monkey climbing on a yellow stick, and the child licked all the paint off, and it made him very sick. . . as paint would, in the days when Harry Graham was writing Ruthless Rhymes. It contained mercury, which poisoned Willy, who died of it, thus letting the poet draw the moral: 'Twas a chilly day for Willy when the mercury went down. 1 shall forbear to sent a copy of Ruthless Rhymes to David Scholey, Mercury International's genial chairman, for he has only to read his share price. Mercury shares have been appearing in the list of New lows for 1986' with a regularity which must be especially embarrassing for a group made up of a merchant bank, a stockjobber, and two stockbrokers. No run-of-the-mill grouping, either, for this is the investment bank, built round S. G. Warburg, on which so many hopes will ride, into the Big Bang, and beyond. If (as the Bank of England has forecast) we are to develop half a dozen such British banks, of international class, able to compete with the world's best, in London and out of it — if we have such banks, Mercury must be one of them. What, then, is the market telling us? First (suggests Norval Reed at brokers Grenfell and Colegrave) that the merchant banks' wonderful run in corporate finance is past its best. They are running out of companies to take each other over. No one thinks that such earnings can be quickly replaced in the new securities markets: Union Dis- count, handing back its licence to make a market in gilt-edged, saw its shares go up. Union realised, and the whole City is now realising, how hard the newcomers play. They may also have an advantage over the home side if the game changes — putting a premium on the ability to buy, hold and distribute huge amounts of stock. No comfort for Mercury to find the newly- issued shares of its old rival, Morgan Grenfell, appearing in the same list. I would not sell either of them short, but it will be a chilly day for the City lithe market is right.
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