FINANCE AND INVESTMENT
By CUSTOS
WITH only the slightest encouragement from events the City has contrived to enter 'a new year much more hopefully than seemed likely a fortnight ago. How much of this hope- fulness is of the seasonal kind which is never lacking in and around Throgmorton Street it is difficult to tell, but there has, of course, been some attempt to marshal the " hull points." On the economic front one can reasonably point to a steadying of home industry during the past three months, although admittedly the main supporting influence has been and still is the quickening pace of rearmament. It is also more than an even chance that a broadening out in American:business recovery will provide a stimulus to commodity prices and, at a later stage, to British exports. So, in relation to the current level of quotations for most groups of ordinary shares, one can argue • with some show of reason that on purely economic grounds there is scope for improvement.
The rub is in the field of international politics. Will the totalitarian States allow what looks like the beginning of a business recovery to gather any momentum, or are they deter- mined to keep the democracies on tenterhooks ? Nobody knows the answer, but I am hopeful that this year will witness the rebirth of democratic initiative both in politics and business. If it does, then the chances of war will certainly not be increased and may easily be sensibly reduced. In saying this I am not suggesting that capital appreciation will be easy to come by in 1939, but there should be scope in commodity shares, many groups of home industrials, and in Wall Street. The outlook for fixed interest securities, to say the least of it, is blurred. For the present I would rather hold the deposits of the larger building societies than gilt-edged stocks.
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