MARKET FEVER

New Zealand Herald, Volume LXXIV, Issue 22716, 30 April 1937, Page 11

MARKET FEVER

LONDON CONDITIONS FEARS OF A SLUMP INVESTORS NERVOUS DEPRECIATION OF STOCKS By Telegraph—Press Association—Copyright (Received April 30, 1.15 a.m.) LONDON, April 20 President Roosevelt's slogan of 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. They opened to-day weaker after the worst day of the year. The present atmosphere is such that no rumour is too wild to gain credence. Investors are affrightedly leaving money in the banks and even turning their shares into cash'at a loss. New Slump Not Foreshadowed Investors are asking if the present setback, which must have reduced the market capitalisation of securities more than £1,000,000,000, is not a prelude to a ne\v slump. "Such fears are based on failure to grasp the elements of the situation" one of the most experienced stockbrokers told a representative of the Australian Associated Press. "The city cannot have a slump with a 2 per cent bank rate, a £100,000,000 defence loan and a constant stream of excellent company reports and trade statistics. It simply does not make sense. "The Stock Exchange cannot indefinitely languish while industry is humming. The reaction may be both sudden and rapid." The Daily Mail tersely advises investors to keep their stocks and their heads. The Board of Trade's statistics show the biggest jump in retail sales on record. Cumulative Influences While Mr. Roosevelt and Mr. Neville Chamberlain can claim the doubtful honour of starting the present malaise the technical character of it cannot be over-emphasised. Initial declines placed a severe burden on the market machinery and had a snowball effect, forcing operators to turn saleable stock into cash in order to meet obligations incurred in other markets. Even those who have come out unscathed are reluctant to assume fresh commitments, thus depriving the markets of one of its normal cushions. Such a major slide cannot pass without affecting short-term 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 in which responsible City men and industrialists concur. It is hoped that meanwhile politicians will spare the delicate mechanism of finance further shocks and do their best to restore shaken confidence.