FINANCE AND INVESTMENT THE City is again a very depressing
place. Here we are with the New Year only a fortnight old and markets are already in the throes of a really bad attack of nerves. Just what has caused this latest spasm it is difficult to say. Nobody expected much from the Rome talks, but that has not pre- vented a good deal of selling once it became apparent that Mr. Chamberlain and Signor Mussolini had agreed to differ. As usual, the Continent has been more violently disturbed than London, but Johannesburg, where non-Aryan influences are paramount in the Kaffir market, has behaved worst of all. So we have the odd situation in which gold is quoted not far short of 15os. an ounce and gold shares are flung on the market almost without regard to price. I must add, in fairness to the sellers, that so far they have concentrated on the non-producing mines whose prospects depend on development work involving substantial capital outlay. Apparently, the Kaffir houses are taking the view, which may prove correct, that the raising of this money through the stock markets is going to present some difficulty.
One of the few consoling features in this dismal position is the comparative steadiness of sterling. Any foreign- exchange dealer and bullion broker will admit, somewhat ruefully, that the curbs on speculative business are proving pretty effective. The Exchange Fund is thus able to control the rate without any large-scale intervention and has, in fact, been a buyer of dollars, on balance, during the past fortnight. I still feel that sterling is not yet out of the wood and, for the same reasons, that the shake-out in the stock markets may not yet be completed. Only a really sustained rise in Wall Street could rally the speculative sections of markets here and, for the moment, I am unwilling to bank on such a rise taking place. America's latest business news is not bad, but it is indecisive enough to justify caution.
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