LONDON INVESTORS

Evening Post, Volume CXXIII, Issue 101, 30 April 1937, Page 9

LONDON INVESTORS

EXPERTS' REASSURANCES

'DOESN'T MAKE SENSE'

REACTION EXPECTED

Ouitod Tress Association—By Electric Telegraph —Copyright. • LONDON, April 29. President Roosevelt's slogan in 1933, "The only thing we have to fear is fear itself," is peculiarly applicable to the present state of the markets, which have deteriorated beyond reason and opened weaker after the worst day of the year. The present atmosphere is such that no rumour is too wild to gain credence. Investors are nervously leaving their money in the banks^and even turning shares into cash at a loss. They are asking whether the_ present setback, which must have reduced the market capitalisation of securities by over £1,000,000,000, is not a prelude to a new slump. NOT WHILE INDUSTRY IS HUMMING. Such fears are based on failure to grasp the elements of the situation. One of the most experienced stockbrokers told the Australian Associated Press agency that the city cannot have a slump with a 3 l>er cent, bank rate, a £100,000,003 defence loan, and a constant stream o£ excellent company reports and trade statistics. ' It simply doesn't make sense," he said. The Stock Exchange can't indefinitely languish while industry is humming. The reaction may be both sudden and rapid." * The Australian Federal Treasurer, Mr R. G. Casey, expressed a similar view, adding: "When the re-armament money begins to talk it will talk loudly." HEALTHY LONG-TERM OUTLOOK. The "Daily Mail" tersely advises investors to keep their stocks and their heads. "The Board of Trade statistics," it says, "show the biggest jump in retail sales on record. While President Roosevelt and Mr. Neville Chamberlain, Chancellor of the British Exchequer, can claim the doubtful honour of starting the present malaise, its technical character cannot be overemphasised. The initial declines placed a severe burden ori the market machinery, and had a snowball effect, forcing operators to turn saleable stock to cash in order to meet obligations incurred in other markets, while even those who came out unscathed are reluctant to assume fresh commitments, thus depriving the markets of one of the normal cushions. Such a major slide cannot, pass without affecting shortterm economic activity, but the healthiness of the long-term outlook is indubitable." : The "Financial News" expresses the firm conviction that new peaks of activity and prosperity will be reached in the next two or three years, a view with which responsible city men and industrialists concur. It is hoped meanwhile that politicians will spare the delicate mechanism of finance further shocks and do their best to restore shaken confidence. DOUBTS ABOUT EXPORT MARKETS. Lord McGowan, chairman of Imperial Chemical Industries, declared in his annual report: "With, the widespread tendency towards rising commodity prices and the re-armament plans, there is no reason to anticipate a decline in activity in 1937, but while I do not fear that the volume of home trade will diminish, it is difficult to contemplate the export markets with equal confidence. Economic nationalism is restricting foreign trade, while some Dominions, notably Australia and New Zealand, with greater production of foodstuffs and a stationary population, may have reached the maximum in the export of primary produce, and Britain may therefore have to produce goods she now buys outside England. Industry should therefore encourage research, improve efficiency, and strenuously endeavour to maintain foreign trade. ... ■ ;