In Foul Weather, A Wild Blue Yonder

Despite some foul economic weather, stock prices are soaring on both sides of the English Channel:

In London, industrials have gone up 20% over the past year, two weeks ago hit an alltime high. All this came in the face of the facts that: for the third successive year, corporate profits are down; dividends have been cut by one-third of the companies reporting so far in 1967; the United Kingdom's economic growth rate lurches along at an annual 2%, and the balance-of-payments problem is far from solved. "There is no economic justification for the rise," said the Economist. One explanation for the surge is a nationwide trend toward mergers, which has reduced the number of shares on the market and generated more liquidity in search of new investment.

In Paris, stock values climbed an average 10% during August, blue chips have gone up by an average 25%, and some (such as Rhone-Poulenc and Michelin) skyrocketed by 40% or more. Yet the French economy remains in the doldrums. Unemployment is high, industrial production is sluggish, and most French businessmen are worried about the July 1, 1968, deadline when disappearing Common Market tariff barriers will expose them to harsher competition. Reasons for the stock climb: Bourse prices simply got so low that they began to look like bargain-basement buys to investors throughout Europe; the French government intervened to inspire stock purchasing by, among other things, allowing French companies to use up to 10% of their capital to buy their own shares.

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