Market report
CUSTOS
Here we are in the middle of a currency crisis once more. Herr Strauss is talking of a possible German mark revaluation of between 8 per cent and 10 per cent and suggests another international conference on exchange rates (the Bonn conference last November achieved nothing). With De Gaulle gone, a devaluation of the French franc is a real possibility. Sterling, therefore, is in trouble again and down go gilt- edged securities. So also have some recent fixed interest issues. The £20 million Agricultural Mortgage loan looked a failure from the minute the terms were announced. It was standing at two to three points discount earlier this week. The big Burmab convertible issue, however, got away. Equities now stand 121 per cent below the record levels achieved at the beginning of this year and show very little life.
The arguments which always seemed to turn any bad news for the economy into good news for ordinary shares looks a little thin now. Activity is minimal at the moment, with the institutions bolding back. But the weight of new money will tell before long. The annual report from the biggest investor of all, the Prudential, shows that in 1968 the company invested £140 million of new monies. Gilt-edged securities got £11 million, debentures £20 million, mortgages £22 million, property £22 million, and ordinary shares £53 million. The money has to go some- where. Gilts are not attractive at the moment (though with capital gains exemption they will be when the tide turns), debentures have lost a lot of popularity, property and mortgages are not easy to find, so that leaves equities. In any case, in these performance-conscious days, the life companies must stay with the equity market.
Previous page
