BRITISH TRADE REVIEW.

Auckland Star, Volume LXII, Issue 259, 2 November 1931, Page 4

BRITISH TRADE REVIEW.

AFTER THE ELECTION.

SPECULATORS TAKE PROFITS. GILT EDGES EASE. LONDON, October 31. The "high spirits which prevailed on the Stock Exchange on Wednesday morning as the result of the National Government's successes at the polls were not surprising, but unfortunately the buoyant tone Avas not maintained.

The public demand for securities which all sections had anticipated did not materialise, but there came instead a rush of profit taking by professional operators, who, under the regulations regarding cash dealings, had to sell within three days if they wished to avoid taking up the stock and paying stamp duty. This naturally lowered prices.

Gilt-edged securities especially suffered, their difficulties being accentuated by the decline in the sterling exchange on most centres. In these circumstances it is satisfactory to note that Australian stocks maintained the improvement which has been going on since the beginning of the month.

New Zealand Stocks Higher.

New Zealand stocks , have aleo shown steady appreciation, but until the Government's intentions regarding tariffs _ are known stockbrokers do not anticipate much investment by the public.

Among shares showing an improvement are tho'se of a number of banks, including Australian banks. On this matter, the ' ; Morning Post's " financial editor writes: "It ,is impossible when recording the verdict of the country at the election notto recall the prominence given in ■• the manifesto of the Socialist party to the attack upon the banks, and the proposals toward their nationalisation.

" Unquestionably these tactics were not without effect in bringing about the electoral massacre of practically all the leaders of the Socialist party, for the electors had seen quite enough of the effect of two years' control of the national finances by a Socialist administration without desiring to witness what might happen if control were granted of th-5 banks and the credit system. „ •

" Moreover, the public probably 'formed a pretty shrewd idea, not merely of the baseless character of the charges made by the Socialist leaders against the banks, but of the fine part actually played, by many banking leaders during the past two years iu warning .'the Government ani the country of the results which must follow the prolonged orgy in national expenditure." Finances Unsettled. Discussing the position, the " Economist " says:—"There is as yet no disposition to launch out on new capital expenditure. The continued lack of business on the new capital market confirms this. From the financial angle this lack of enterprise is due to several causes. First and foremost, no one is able ' to take a view.' No one knows when or where the pound sterling will settle down, or what is going to happen in foreign countries, and at Home, too.

" There have been two serious obstacles in the way of immediate business progress, one the general election, the other the 6 per cent bank rate. Some observers are inclined to believe that the bank rate was maintained during the election primarily as a precautionary measure against any unsettling effects which the election might have at home and abroad. ■

" But there is little doubt that so high a rate, if indefinitely continued, will have a deterrent effect on trade, because it directly raises the cost of bank advances, and also because it tends to deflect funds into the money market, more particularly into Treasury bills.

" Now that the election is over there would perhaps be ground for hoping for an early reduction were it not for the upward trend of rediscount rates abroad with the prospect of further increases at important centres."

Mr. Devereux, representative of the Australian Wool Council, reports that the result of the elections, as far as the wool trade is concerned, has been to confirm the anticipation that better times are ahead for the British woollen manufacturing industry. A confident, cheerful tone prevails in Yorkshire, where considerable activity exists'and additional machinery is being brought into use. Although it cannot be said there is undue speculation sound business is being done, and a confident outlook exists in regard to the future, with a view to possibilities of a tariff on manufactured goods. This outlook appears fully justified.

• From the Continent, however, reelings were somewhat mixed-. . Uncertainty, not to say alarm, which were the outcome of the English election's, has been allayed, and a greater feeling of confidence exists of a return to more stable economic world conditions, but the possibility of Great Britain imposing a tariff is naturally very disturbing to continental wool manufacturers, to whom exporte to Great Britain are an important feature.

The.firmness of the primary markets in Australia is reflected in all markets. Italy is reported to be temporarily short of raw wool supplies, and an active buyer for immediate needs. France is perturbed about tariff possibilities, but the tops market has been quite lively, with prices firmer. Business in noils is quite active. Yarn, transactions are active, but prices are unchanged. There is no improvement reported in Belgium futures, but the markets are fairly active, with minor fluctuations.