AMERICAN SHARES

Evening Post, Volume CXXII, Issue 131, 30 November 1936, Page 12

AMERICAN SHARES

AUSTRALIAN INTEREST

Interest was recently aroused in Melbourne by an announcement that the United States Federal Reserve Board and the United States Treasury would study, and, if possible, draft necessary legislation to deal with the potential danger represented by huge holdings by foreign investors of American stocks. It had been suggested that the position might become acute if foreign holders decided to dump their securities on the American market. Australian investors, states the "Age," have an interest in this matter, as in recent months they have made considerable purchases of American common stocks with a view to appreciation. For some time past several brokerage houses in Melbourne and Sydney have been recommending their clients to purchase certain selected American common stocks, business often being done on dollar overdraft, obtained cither in . London or New York, against approved securities, and at low rates of interest. Many Australian investors who held Australian dollar bonds have in recent times exchanged from these securities into American common stocks, because of the prospects of capital appreciation. Australian investors are interested from the aspect of what effect any control legislation would be likely to have upon American market values generally. It is estimated that in the past year or so probably £5,000,000 has been invested in Wall Street stocks by Australian investors. Money has also been flowing from other parts of the world to New York in anticipation of profiting from the general recovery and lift in prices. It has been suggested that the American authorities are probably alarmed at the resultant rapid appreciation of the dollar, due to this continued influx of foreign funds. The sudden withdrawal of these funds, due to the dumping of the securities on the market by speculators, would adversely affect not only the dollar, but the whole trend of the American investment market. Mr. Roosevelt's proposed control legislation is therefore, of wide general interest to investors. Until it is definitely formulated, however, it is not possible to estimate what the effects would be upon the market generally, and the comparatively small holdings of Australian investors in particular.