WELLINGTON NEWS

Hokitika Guardian, 21 December 1928, Page 3

WELLINGTON NEWS

INVESTMENTS IN SHARES.

(Special To The Guardian.]

WELLINGTON, December If).

During the past twelve months a good deal ol New Zealand capital lias been invested in the shares of Australian companies and particularly hanks which is somewhat ol a pity for it is an indication that Australian securities are more attractive to New Zealand investors than the securities offering in the Dominion. Advantage appears to have been taken by some share-hawkers of this craze of fashion to invest in these shares to place shares ol a new bank to be known as Ibe New Zealand and Australian Hanking Corporation,” and it is reported that some people in Christchurch have actually applied for shares although there has been no prospectus issued. It is rather amazing that people should lie so ready to buy a “ pig in a poke.” None of the New Zealand Stock Exchanges know anything about this proposed hank nor is anything known about it in Melbourne and Sydney, which to say the least of it is remarkably strange. As a general rule it. is besL not to buy shares from an itinerant salesman, or share-pusher, for he is not so much concerned about the merits of a company as the earning of his commission. No doubt people in the country districts will he continually worried by the share-hawker, and the most sensible thing to do when approached is to turn him down flat.

If anyone really wished to invest in shares the sane procedure is to consult a sharebroker who is a member oil a Stock Exchange. The rules ol tins body are very stringent, and they are framed to ensure fair dealing amongst brokers and fair and honest treat men! of investors. Il it is desired to Hi e up shares in a new undertaking the fullest inquiries should be made and above all the standing, capabilities and interests in the company of the provisional directors should lie investigated. 11 the shares ol a new concern ollered id the public have been underwritten ! iy a syndicate they are better worth serious attention if the intention is t > nvest, than those concerns that are not underwritten.

When the shares of a company are underwritten as many have been lately, :t is a guarantee that the aflairs an I prospects of the company have been investigated by a disinterested pari' and approved. When considering in-

vestment in shares, or taking up shares in a new concern consult the sharebroker, or in the alternative consul, vour banker. I lie incident ol the Aus tralian and New Zealand Hanking ( ornoratiuu. Ltd. emphasises the neiessity for amending the Companies’ Act an I n excellent model exists in the new Act passed by the Imperial Parliament a few months ago. That Act makes the. operations ol shady share-hawkers rather difficult. The public need some such protection in New Zealand and no doubt Parliament will realise the desirability of granting that protection.

The development of investments in Stock Exchange securities was inevitable although it is in many respects from the national standpoint it represents a misdirection of investment ol Dominion funds. In the past the most important source oil' investment was the land. Everyone with money to invest was eager to lend on mortgage of real estate and particularly 011 broad acres. Von were tolcl that the land would not run away, it would he always thoie. but you were not told that your money could vanish. Alortgages are not now in favour, and the reasons are obvious. Much land was undoubtedly over capitalised during the boom yens, some of it is still over valued, and a good many mortgagees have lost too heavily to he again attracted to lend ing on land. It may he said that land speculation, over valuation, over borrowing. the moratorium, high costs, both prime and overhead, and narrow margins of profit have all tin* efiect ol causing distrust in the security of faint lands.

'1 In* farming industry has siiliered from this and although recently some welcome improvement has been shown it will he a long time belore mortgages on broad acres will stand as high with investors as in the past. Ihe larming industry has not expanded as it should have done had private capital been Available in the past, and so the State has had to find ways and means of financing farmers, hence Rural Credit Associations, Intermediate Credits, and other methods ol helping the larming industry. It must, however, he remembered that New Zealand is not alone in this matter lor agriculturists in practically every other country have had to be assisted by the State.