Institutions deserve our gratitude

In the same back-of-the-envelope calculation he reckoned the UK banks will be able to cover at least £20 billion of this in additional lending, underlining the fact that, in spite of complaints from trade bodies and occasionally from Government, banks are in fact lending more this year than last — albeit they are imposing tighter restrictions on that lending and charging more.

His key point, though, was that an even bigger slice of the shortfall was being covered by UK institutional shareholders with their willingness to refinance UK Plc. In the past few months, and again today, these have agreed to inject literally unprecedented amounts of new equity capital into UK listed companies — the latest this week being in backing for rights issues from Travis Perkins, the building trades supplier, and the mining group Lonmin, both of which are said to be looking for between £200 million and £300 million.

Without wishing to be rude about either company, neither sets the pulses raising nor would claim to be at the glamorous end of equity investment. But that is the point — it is not just the biggest names which are getting finance.

The support for mid-cap business underlines the breadth of the institutions' commitment to rebuild balance sheets. A rough totalling of the new money committed so far this year suggests companies have raised more than £30 billion from investors.

No one has seen anything like this before, and the institutional shareholders deserve some credit for it. They have had a rough time in recent months, standing accused of not being sufficiently active during the boom in monitoring what banks and others were doing.

They have reluctantly been cast as the villain, or the dog that did not bark, in what is often described as the biggest-ever failure of corporate governance. Whatever the merits of these criticisms — and they do fail to appreciate the considerable efforts made by many leading institutions — these institutions now deserve recognition for their willingness to stand behind companies when so many banks will not.

We should recognise, too, that this is far from easy given the way big companies have been slashing their dividends — British Telecom on Thursday is expected to be the latest. This means that the cash flowing into institutions has been very much reduced. Finding these billions is putting considerable strain on their resources at a time when dividends are drying up.

We tend to take things which work normally for granted and only notice them when they go wrong. So at a time when good news is still in relatively short supply, let us at least recognise that the stock exchange is working as it should, and delivering new capital to a much greater degree than the exchanges in other countries. For this we should all be grateful.

If these shareholders were not willing to take the considerable risk that goes with injecting such vast sums, the impact of the recession on the economy would be considerably more severe.

Good news from the high seas

Anyone who thinks the stock market has had a rough ride in this recession should look at what has happened to shipping, where at one point towards the end of last year the index for dry bulk cargoes had dropped by well over 90% in eight months.

The positive thing you can say about ship brokers when something like that happens is that they don't suffer quite so much as ship owners. The latter have nowhere to go to avoid taking a loss, short of laying up or scrapping their fleets. Brokers have to live with lower rates, so they work harder for less money, but cargoes still move. There is still business to be done.

Given what is happening in their world, the directors of Braemar Shipping Services this morning produced a remarkably good set of numbers — the best ever, in fact. Chairman Graham Hearne — still going strong in his seventies— is also upbeat about next year. But this does not mean that shipping, still less the world economy, is on the mend or that the company is ploughing through maritime green shoots.

The good results stem more from a decision five years ago to protect the overall business from the fluctuations in the shipping market with some diversification away from broking. Braemar is now a significant force in loss adjusting, marine surveying and some bespoke engineering consulting, and these activities chipped in 25% of group profit.

Group revenues tend to be in dollars, with most costs in sterling, so the fall of the pound against the US currency also gave profits a significant boost. As a rough rule of thumb a 30-cent swing makes a £10 million difference to the top line. That can reverse in this turbulent world but one gets the impression Braemar is equipped to cope with most of what is thrown at it. Its shares have taken a battering, but today's figures should prompt a rethink.