ANXIOUS TIMES

New Zealand Herald, Volume LXXII, Issue 22215, 16 September 1935, Page 9

ANXIOUS TIMES

LONDON STOCKMARKET

WORLD SITUATION LAVAL'S SPEECH A TONIC By Telegraph—Press Association—Copyright (Received September 15, 5.5 p. m.) LONDON', Sept. "14 The London .Stock Exchange has been through anxious times lately. It met the situation with what one financial writer describes as consistent, stoical calmness, and although prices all round were inclined to weakness, there was no great amount of selling. M. Laval's speech at Geneva had an immediate tonic effect and, led by the gilt-edged market, there was a general recovery. All sections closed at the highest level of the week. Industrial shares especially wore good. Other favourable factors were the fall in the Treasury bill rate and the placing of a trustee issue of nearly £1,000.000 by the African Railway Finance Company guaranteed by the British Treasury. This is regarded as heralding the reopening of the new issue market for first-class stocks. Chance of Pacific Settlement City opinion of the situation is well described by the Daily Telegraph's financial editor, who says: "The general feeling in the markets is that the declaration of the French attitude has brought about at least an outside chance of a pacific settlement. "It is also generally recognised that if events take that course there will be an instantaneous all-round recovery of security prices. The speeches of the British and French Foreign Ministers created new hope in the minds of business men, not merely that an immediate war may be averted, but that the League and all it stands for have been reprieved from what might have been a sentence of death."

The writer emphasises the fact that leaders in the City have refrained from taking any of the steps which usually heralded a first-class crisis. None of the great banks, for instance, has thought it necessary to take the precaution of closing credits or demanding increased cover from their clients.

New Issues Being Withheld

"The uncertainty regarding the outcome of the Abyssinian dispute," continues the writer, " is delaying many important financial undertakings, notably new capital issues which cannot be made until the international political situation is more settled. Issuing houses are ready with prospectuses amounting to many millions of pounds for companies which desire more capital to expand their business. These are firms in the building, engineering, aircraft, provisions, drapery and other industries.

However, underwriters are holding back until the European situation clears, and until it is certain that Britain will not be involved in any war directly. " This position established, we may expect a flood of new issues, for conditions here are favourable to new flotations. Much money awaits investment. Trade reports show a general improvement. Commodity prices are advancing, and the higher employment figures are a source of encouragement, so when the new issues come they will have a good reception." A well-known financial writer says that apart from international politics there seldom has been a time when conditions looked more promising for a further rise in many securities, especially in industrial shares.

SAFETY OF WORLD RELIANCE ON COVENANT MUST NOT BE WEAKENED .British Wireless EUGBY, Sept. 13 In the course of M. Laval's speech at Geneva he said: "France places all its confidence in the League. Sometimes we havo been disappointed at Geneva, but the Covenant is our international law. To weaken the Covenant would be to weaken our security." Turning to more direct consideration of the Abyssinian dispute, M. Laval said: "Since the Walwal incident occurred I have spared no efforts for .conciliation, and in the ultimate effort which the Council is now making I

shall do my utmost to bring about conciliation. I am still hopeful and I shall persist in my efforts. "We believe altogether in the great ideals of the League. France is bound by the Covenant and will not shirk her responsibilities." The speakers after M. Laval included the Aga Khan, who said: "The conception of collective security appeals to Indian thought as the only alternative to international anarchy with its ever-growing force.

"At the same time criticism of the League in India on the grounds of. the size of India's contribution and of the League's past failures is also growing."