U.K. Scheme To Curb Foreign Investment

Press, Volume CVIII, Issue 31863, 16 December 1968, Page 27

U.K. Scheme To Curb Foreign Investment

(N.Z.P.A.-Reuter—Copyright i LONDON, Dec. 11.

The United Kingdom Government has quietly introduced a new scheme to track down the ebb and flow of big investments in the sterling area, which will particularly affect British investors in Australia. There has been no official announcement, but according to details leaked from banks and stockbrokers—who have been officially advised of it—it calls on all dealers in shares to give the Bank of England regular records of nearly all their dealings in overseas sterling securities. Existence of the scheme was confirmed in authoritative quarters, but it was denied that it is a backdoor attempt by the Government to enable them to obtain information which they could use to impose new curbs on overseas investments. Its object, it was said, was to give the Government’s economic planners a better picture of sterling area investment trends to enable them to make more accurate assessments of balance-of-payments prospects. It was described as an attempt to fill a gap in statistical knowledge of sterling area and outward portfolio investments —basically the buying and selling of shares as distinct from direct investment through a company financing its own overseas branches.

Reasonably up-to-date information is already available of outward investment in non-sterling areas, because details of these have to be cleared through exchange control, but at the moment only sketchy details are available of outward investment to sterling areas. Excluded from the scheme are individual transactions of £5O or less, and those for which there is no cash settlement such as gifts and share exchanges. Included will be two kinds of business:— (1) Purchases, including subscriptions to new issues, and sales including collection of redemption proceeds in the United Kigdom, or other

sterling securities whether in the United Kingdom or overseas on behalf of customers resident outside the United Kingdom. (2) Business in certain sterling securities effected in markets outside the United Kingdom, whether on behalf of a United Kingdom or overseas customer.

Since 1967 portfolio investment from Britain to the overseas sterling area is estimated to have jumped by £loom. Much of this new money has gone into Australian mines where the current boom has been a great investment attraction.