Restricted Trading In Overseas Shares

Press, Volume CVI, Issue 31166, 16 September 1966, Page 3

Restricted Trading In Overseas Shares

(New Zealand Press Association> WELLINGTON, September 15. The Government has approved procedures which will enable genuine investors to buy shares in overseas sterling area companies from another New Zealand resident. The Minister of Finance (Mr Lake) said tonight that the system would prevent loss of overseas exchange from the official reserves.

The scheme was, of necessity, a very restricted one, he said.

The main features of the scheme are:—

(1) Sterling area securities registered in the name of a New Zealand resident before June 17 last may be sold through a member of a stock exchange in New Zealand for New Zealand currency to another New Zealand resident, but all new script resulting from these transactions must be lodged with a depository approved by the Reserve Bank.

Securities so purchased may then be resold only in New Zealand, except that, with the permission of the Reserve Bank, they may be switched on an overseas sterling area market for another security or sold for overseas currency which must be remitted to New Zealand through the banking system. (2) Overseas investments, other than those acquired in accordance with the first requirement will not be available for trading in New Zealand if they were first held by a New Zealand resident after June 16,

(3) No person may deal in overseas currency in exchange for New Zealand currency except as provided in the Exchange Control Regulations. New Zealand residents wishing to transfer overseas balances to New Zealand may do so only through the banking system. Mr Lake said the scheme

would discourage those who had in the past transferred overseas currency balances to New Zealand through stock exchange transactions and obtained a premium “The over-all plan is to allow genuine investors an avenue to spread their portfolio, but to ensure that overseas currency required for use in New Zealand is remitted through the banking system, and this reinforces the new rules introduced in June covering the transfer of New Zealand Government stock from the London to the New Zealand register,” he said.

Mr Lake emphasised that this relaxation applied only to sterling area investments and to transactions between bona fide New Zealand residents.” The market would not be open until full details had been agreed between the Stock Exchange Association of New Zealand and the Reserve Bank, he said.

“The envisaged relaxation on trading of overseas securities in New Zealand, although not going as far as our association wished in its representations, nevertheless returns to investors a limited market in this country, and in doing so recognises the principle that New Zealanders, one to another, can trade their overseas investments for New Zealand currency,” said Mr A. W. MacArthur, president of the Stock Exchange Association. “Discussions are now pro-

ceeding with the Reserve Bank on methods to be used in controlling scrip movements and it is hoped to reopen quotations within the next few days.”

The chairman of the Christchurch Stock Exchange (Mr J. J. Chamberlain) said the scheme did not go nearly far enough to achieve a satisfactory situation. Nevertheless the move would be welcomed by the investing public.

An undesirable feature of the regulations was that there would be a gradual run-down in the overseas stocks which could be dealt with between New Zealand residents.