513
+
16.
> would add with reference to the remark in the
Money Article that the "real investor" does not under-
stand the tender system that this is quite correct. It
should however have been added that the "real investor" is
quite a negligible quantity in connection with all Loan
issues, and that such issues are almost entirely taken up
by the Stock Exchange and by the Financial Houses. What
happens is that when it becomes generally known that a Loan is going to be a success the so-called public which is almost
exclusively composed of small people and clerks so-called
stags or premium hunters who form the fringe of the Stock
Exchange and City Business rush in vast numbers of sub-
scriptions of small amount in respect of which they hope to get allotments which they at once sell to capture the premium which usually exists in connection with a successful issue, it being unfortunately practically impossible in making allotment of an oversubscribed loan to distinguish the "real investor" from the applicants who are merely trying to capture a premium.
17.
I would add that the Stock Exchange List of yesterday's date shows that there was a transaction yesterday in the existing Hong Kong 3½ per cent Stock at the price of £100 per cent. From which however should be deducted the
amount of accrued interest 1.6. 21. 3. 4 per cent, bring-
ing down the net price of the Stock to £98. 16. 8 per cent. On the other hand transactions in the new Loan took place yesterday at ⅞ to 5/6 discount on the issue price of 99 per cent, showing therefore that for wholesale operations the new Stock is valued at from £98. 7. 6 to £98. 10. 0 per cent. It will be seen therefore that the underwriters and the newspapers have very little ground for their complaints as to the conditions under which the new issues have been
magi