To the Editor of the month-CHINA Dat News"
Sim—With reference to the rex mark' in your article of January, 21—"The weak holders have be" come a danger to others."—I wish to point out that they (weak hold ers) do not hold a single share. They have bought for delivery two of three months hence, naturally, at a much higher price than the cash price. When the price of the raw material drops, the real, hold~ of shares knows that the' price of shares will drop too jnd_ sells at once while he can get good price. It is he who weakens the market, He is not a weak holder but. only takes advantage fof the market. He may came in again when shares are cheaper that the price at which he sold. The man who -buys on time has the broker entirely at his mercy for the term of his contract—untit settlement day. If the broker warns him of danger the client may—probably will—disrogard the advice and hang on to his contract till it shows a loss which he can not pay. I do not deny that the position' of rubber looks promise ing, but you will no doubt remem ber' when the price of rubber was 12/6 (150. pence) and that it gradually fell to sixpence. At that time the argument was that even if the price dropped to 5/-, should still make handsome profit.
The principal trouble with the Shanghai share market is that ered-it is given for too long a period (three and four months). If the term were shorter and a margin paid, there would not be so much trouble, for the contract should contain a clause that the margin was exhausted shares would be sold. This would also tend to weaken the market but the broker would at something. The drop in shares would not affect the bond folder, for he would get his di rvidends just the same, Bat he takes advantage of the market by, selling and hence weakening the market more than the drop in the Yaw material probably warrants. Tam, ete,
Text read from the printed page and cleaned; old type leaves the occasional error.