3 MARCH 1939, Page 50


HAVING been wrong in January, when prices plunged and Hitler failed to roar, the Stock Exchange now seems to be anxious to make up for lost time and money. Nobody would claim that markets are really active, but there has been enough buying, plus inquiry, to put prices up quite sharply over a wide front. Most of the big investors, including the institutional investors, have done very little. Not unreason- ably, they have been content to see the depreciation on their already substantial holdings diminish without being suffi- ciently impressed by the look of the horizon to make new purchases on any scale. So, for once in a way, the running has been made by comparatively small investors who have been making up their minds that the ice is now safe enough to justify cautious skating. I feel that they have formidable evidence on their side. European political prospects, so far as they are assessable at all, certainly seem less gloomy than for many months past; there are reliable indications in many trades (e.g., tinplate) of a pick-up in demand; the Chancellor has already taken the sting out of his Budget ; and the tech- nical condition of stock markets is immensely strong.

If one is prepared to take a moderately hopeful view of politics, which I think is reasonable enough in the light of recent events, there is ample justification for a cautious buy- ing programme in the stock markets. In many groups of home industries (e.g., tinplate, textiles), in home rail prefer- ences, shipping shares, Kaffirs, base metals and American and Canadian industrials quotations are still low in relation to prospects of a genuine trade recovery. My own feeling is that business is ripe for recovery in this country and in the United States if international politics will give it a chance. Those who now think it will get a chance should certainly consider buying part of their requirements. The political sceptics, of whom there are still quite a number in the City, will, of course, prefer to let the March boat go and join the party, if all goee well, at a later date, even if it then costs substantially more.

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