COMMERCIAL Exchange Controls Annoy Investors

Press, Volume CVIII, Issue 31856, 7 December 1968, Page 20

COMMERCIAL Exchange Controls Annoy Investors

Many millions of dollars’ worth of overseas assets, especially dividends from overseas securities, would be brought back through the banking channels if the holders knew that they could get a few £s sterling or Australian dollars at some later date if desired, the chairman of the Christchurch Stock Exchange (Mr Somers Cox) says in his annual report.

New Zealanders generally have grown to look on overseas assets as something to be retained, knowing only too well that if they are liquidated and brought back to New Zealand through banking channels they have little chance of obtaining permission to remit even a portion out of the country again, he says.

A solution could be found to the betterment of the investors and country generally if constructive consultations between the stock exchange and Reserve Bank were possible. Exchange Controls Since June, 1966, the New Zealand investor has been subjected to ever-increasing exchange control regulations, stifling investment and not improving the financial image of the country overseas. He realises as much as anyone that something had to be done to stem the drift of overseas funds coming to

1 New Zealand through avenues other than banking channels. However, he believes that ’ if corrective measures had s been taken early enough the e premium New Zealand resi- ’• dents were prepared to pay for overseas funds would not have risen so high. It was undoubtedly this attraction that caused funds that would v and should have been remitB ted through banking channels, g to be directed elsewhere. e Excessive Premiums One of the major reasons r ‘ for the excessive premium on e overseas securities in the early 1960 s was the attractive 0 yield and capital gain available to investors of New Zea- * land Government stock on the; t London register. For the financial years 1960-68, more than S47m worth of this stock was transferred from the London reg- > Ister to the New Zealand register. Mr Cox suggests that the greater proportion of that was purchased with funds that should have been brought to New Zealand through banking channels. The amount invested in New Zealand Government stock by New Zealand residents and

held on the London register is not available but it must be many millions of pounds sterling. The Reserve Bank was aware of these purchases. Mr Cox says that the investor at present has confidence in the future of New Zealand and he shares this view. Improvements However, it will be necessary to be continually looking for improvement in the techniques of management and willingness of employees to give of their best to enable the country to maintain a standard of living it has been used to. On the primary industry, Mr Cox says that while he is aware of the efficiency of many or most of those actively engaged in farming, he suggests the formation of larger co-operative units or companies in some instances to improve the productive capacity and efficiency.