IF WAR CAME.

Mt Benger Mail, 2 November 1938, Page 1

IF WAR CAME.

EFFECT OF EUROPEAN UPHEAVAL. “OVERSEAS PRICES NO GUIDE.” OPINION OF AUSTRALIAN FINANCIAL JOURNAL. Dismissing the' recent fall in prices on the Australian and New Zealand Stock Exchanges, a writer in the October nun her of Rydge's Magazine asks whether a European war would really have all the dire effects on Australian investments which the market appeared to anticipate. Admittedly, the writer says, stocks of companies operating in belligerent countries would suffer. In the event of a European war, no one would care to hold stocks in German companies or in French companies, for example, because the whole course of business in those countries would be so seriously upset that almost anything could happen to the enterprises in which investors had their money. “But could a business operating in Australia be so seriously affected as this?” the writer asks. “On calm reflection, we are forced to the conclusion that it would not; our conclusion is that war abroad .would .probably mean freer spending in Australia. Just as the Great War operated as a fillip to local industry, just as it saw an era of rising prices, and just as companies had unbounded prosperity, so would history be repeated. “Therefore, it can bo seen that Australian investors should not blindly follow nervousness in European investment circles and, further, that every fall on the European stock exchanges should not necessarily be followed by sympathetic falls on the Australian stock market. Does it not seem obvious that war cannot affect Australian stocks to anything like the extent it can disrupt overseas investments? “It certainly seems that our stock exchanges have reacted too severely altogether to events overseas. It is clear that nervousness has taken the place of calm reasoning, and many stocks have been marked down to unduly low levels. The result is that a number of them now give very good and safe income,yields to investors and opportunities for profitable investment. ’'