Follow the Leader

When Wall Street had its Blue Monday on May 28, it was followed by a Black Tuesday on most of the world's stock markets from Paris to Tokyo. But while Wall Street has staged a mild summer rally, other stock markets which followed the U.S. down have not followed it up. Foreign bourses have been more concerned with disquieting news at home than with messages from Manhattan.

The West German stock market slumped last week to a three-year low, down 13% since Blue Monday alone, as investors were preoccupied by tarnish on the German miracle-inflation, slackening production and softening profits. Contributing to the German unease is the financial fry of Millionaire Shipbuilder Willy Schlieker (TIME, Aug. 3), whose unexpected tumble set off nervous speculation that more than a few other German postwar "wonder boys" might also be overextended and undercapitalized. Last week a Schlieker spokesman said glumly, "Bankruptcy proceedings have just been opened," involving all 23 Schlieker companies.

In Italy, the government's recent nationalization of the electric power industry and passage of a 15% withholding tax on dividends has kept the Milan Borsa from rallying with Wall Street. Even on those stock exchanges where Wall Street still sets the pace, local issues have made for lagging prices. In London, where the Financial Times index inched up from 252.8 in late June to 266.7 last week, the preoccupation was over whether Britain would get in the Common Market; financial analysts predicted a brisk rise in stocks if it does. In France, the worry was whether the government would resort to stiffer taxes, or borrowing, to aid the pieds-noirs flocking in from Algeria.

Two big markets abroad were barely affected by Wall Street's fall or rise. On the frenetic Tokyo exchange, stocks have been depressed for months because of the government's stringent credit restrictions aimed at easing the balance-of-payments deficit. And South Africa has so isolated its economy from the rest of the world that there has been hardly a ripple of reaction on the Johannesburg exchange to Wall Street's recent ups and downs. But gold stocks have begun to rise again because speculators remain unconvinced by President Kennedy's dramatic denial that the U.S. would devalue its dollar by raising the price of bullion.

Only on two major exchanges have stocks moved up lately in close harmony with Wall Street: Amsterdam, where 250 of the 2,400 listed stocks are those of U.S. companies, and Toronto, where an abundance of U.S. money is invested.

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