FUNDS AND SECURITIES

Evening Post, Volume CXXX, Issue 22, 25 July 1940, Page 14

FUNDS AND SECURITIES

OVERSEAS HOLDINGS ACCOUNTANTS' POINT OF VIEW "Evening Post," July 25. Reviewing the Finance. Emergency Regulations as applied to overseas holdings the "Accountants' Journal" holds that as to the Government taking over overseas funds.- in the way of currency or of free or fixed deposits held by the ordinary investor, there can be little complaint if the owners are reimbursed at "the current rates of exchange in New Zealand currency. But, it is pointed out, in some cases funds are'held overseas by individuals, firms, or companies to meet commitments for stocks. and other purposes. Unless, some equitable adjustment is made in these circumstances grave hardship may be caused. Need of funds for stocks and materials is emphasised. The journal holds that "those who have been prudent enough to arrange overseas credits should not now be penalised, particularly where their foresight is calculated to be. m the best interests of the community. No doubt the Government will take these factors into consideration." As to stocks and shares held overseas, the journal quoted holds that "much has been made of the so-called flight of capital from New Zealand in recent years. We venture the opinion that of the total holdings in this Dominion only a small percentage represents stocks or shares acquired during the-past five' years. In hundreds of cases investors have bought securities in Australia,. Great, Britain, and other. Empire countries over the'past fifteen to twenty-five-years on the policy of spreading, the risk.. >In similar fashion. British. Australian; : Canadian, and other Empire investors have in turn purchased New Zealand securities." Attention is directed to cases where New Zealand, by reason of its climatic conditions, has attracted in the past a fair number of elderly retired persons from other parts of the Empire. These persons frequently derive their income from overseas. It would be unfair to deprive . them of. a large portion of their income, to say nothing of. the sacrifice of a considerable part of their capital. The journal admits that there are no means of ascertaining the amount of overseas securities held in New Zealand, but to sacrifice them at today's market prices would constitute an unnecessary hardship to the individual, and- existing conditions the receipt .;of cincome from: overseas .consti-, tutes a welcome .addition to. the adjustment of our' sterling, exchange position." ' ' , If New Zealand overseas. assets are to be repatriated, then ''our sterling resotirces for future use will be seriously curtailed. In view of the uncertainty as to what our primary produce will realise after the war there are distinct advantages in this Dominion having some assets located overseas because in case of emergency the income from such assets can be utilised for the purchase of essential imports." The question is also raised*. What is Australia going to do about it? "Australia controls her companies and the scrip to the Australian Government does not represent sterling funds. Why should Australia, therefore, part' with real goods for scrip which they control in any case? The attitude of the various Australian companies, will have to be taken into account, because our Government has no control over their policy, and they may not be willing to sanction the transfer of the stock."