Investment flows change

Press, 21 July 1982, Page 24

Investment flows change

PA Wellington The June price wage freeze has changed investment flows, the chairman of the Finance Houses Association. Mr Terry Fitzgerald said in an interview.

He said that it was too early to say where money was now being invested. “But it’s my belief that it's being directed to solicitors’ trust accounts and nominee companies and the industrial debenture market,” he said. “We won't know for sure for six weeks or so."

The package restricted interest rates that could be offered by trading banks, finance companies, and a number of other traditional lenders. But some groups rsuch as lawyers’ mortgages and industrial companies

were not covered by the freeze regulations. Mr Fitzgerald said he trusted that money being directed into the uncontrolled area would be managed professionally. “This wasn't always the case in the previous freeze." He said that a definite change in investment patterns away from finance companies was expected to show up. “We’re adopting a wait-and-see attitude until the Budget, when we expect to see the further direction that Mr Muldoon wants the economy to take, which was the reason the June controls were put in place., "Tve got an open mind until I see what other structural changes are coming, so we can tell where the industry is headed. We expect the

freeze to be tempered by structural changes in the Budget. "It would be unwise for anyone to make long term investment decisions until the outcome of the Budget is known. In the meantime they, should be assessing investment options. Commenting on Government moves to close loopholes in the freeze by making new definitions of interest rates, Mr Fitzgerald said he was “quite happy” to see the preservation of conventions already in existence in financial markets. “This is important.”

The new interest on deposits order restricts the payment of interest in advance to increase the yield to investors. “I regard this as desirable in the present circumstances."