Western Europe: Down Their Own Street

Analyzing a decline of 5% since January in values on the Brussels Stock Exchange, Executive Henri Carpentier gives the traditional explanation. "When New York is booming, we're stable. When New York is stable, we're doing bad. And when New York is doing bad, we're doing very bad. Therefore, we're doing very bad right now."

Carpentier's point of view was understandable—as far as Brussels is concerned. But fact is that values on most European bourses have fallen because of internal economic problems, moving independently and ahead of Wall Street.

Most European markets hit alltime highs in the period 1960-62; they have been slipping steadily ever since. Among the reasons: the tight-money policies of most West European governments; labor shortages, which restrict growth possibilities; the lack in Europe of big institutional investors; and corporate secrecy protected by law. All these add up to low stock yields and considerable public skepticism about stock markets in general.

Since January, the rate of stock slippage has stepped up. Thus, Zurich values are down 6½% this year. Amsterdam is down 8½%, the German Herstatt index is off 12½% and Paris Bourse prices are down 2½%. There is one bright spot on the European market scene: after a very bad 1965, stoic British investors, convinced that inflation is here to stay and that stocks are the best protection, have upped the 'London Exchange 5.5% this year. And some groups of stocks, including gas, because of recent North Sea discoveries, and aircraft, because of improved profits, are up an average 20%.