Monday, Mar. 28, 1960
Reaction to Wall Street
How has the slide in Wall Street affected the world's other stock exchanges? To the delight of foreign investors, the shock has been small. While there was a ripple of selling on some exchanges, it seemed to be over by last week.
P:In London, which has traditionally been most sensitive to fluctuations in Wall Street, stocks dropped sharply. The industrial index, which reached an alltime high in January of 342.9. slid to 306.1, a loss of 10%, v. 13% for Wall Street at its low point. As U.S. stocks rallied and rose on four out of five days last week, shares rose even faster in London, recovered almost half the losses. Despite the timing of the drop, London traders thought that it had been caused less by Wall Street than by the British government's intention to tighten credit further to curb inflation. The rebound, in turn, was largely attributed to the increased earnings and dividends on British stocks.
P:In Amsterdam, Geneva, and Zurich, where the exchanges handle a proportionately greater volume of U.S. stocks than other European exchanges, prices first fluttered, but have begun rapid recoveries. In Paris, prices are down, but the reasons have little to do with Wall Street. The confidence of investors was badly shaken by the resignation of Finance Minister Antoine Pinay (TIME. Jan. 25), has been further weakened by the slow progress in ending the Algerian crisis.
P:In Brussels, stocks are well down from their peaks. The slide was led by stocks in African companies, and it has been going on for almost two years. Congolese shares listed on the exchange were valued at more than $3 billion in 1958. By last week they had shrunk to $1 billion. Despite Congolese promises of economic cooperation at the recent Brussels talks, Belgians fear for their investments once the Congo becomes independent this summer.
P:In Tokyo, the bull market broke only slightly in sympathy with Wall Street, then quickly spurted upward again. The rise, while it was helped by rumors of new U.S. investments in Japan, was chiefly based on the bright prospects of many a Japanese company, notably in electronics.
Sony stock, for example, rose from $1.67 to $3.81 in the last 2 1/2 months as its ex ports soared. Founded only twelve years ago by Masaru Ibuka. a onetime radio-station repairman, Sony now exports 25,000 pocket radios a month to the U.S. and Canada, will soon introduce a portable, all-transistor TV set. Next month it will also start exporting a new semiconductor that it invented: a "tunnel diode." U.S. companies have found it so superior to present diodes for many uses that Gen eral Electric, RCA and others are hustling to mass-produce their own.
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