Quebeckers have become keen capitalists. Nobody could be more pleased than Andr'e Saumier, the outgoing president of the Montreal Exchange. It has helped his exchange regain some of Canada's securities business lost earlier to its main rival, the Toronto Stock Exchange.
In 1986, Quebec-based companies will have issued some $1.7 billion in initial stock offerings, compared with $1.2 billion last year, Mr. Saumier estimates.
``This represents a profound change in the mentality of Quebeckers,'' says Saumier, who resigned in November after only 18 months in the job. He remains a special consultant until Jan. 5.
An earlier generation put much of its money into insurance policies, savings, or ``under the mattress.'' The new generation, encouraged by a tax deduction, has been buying stocks.
A poll conducted for the Quebec Securities Commission earlier this year found that 11 percent of adults in the provincial population of 6.5 million own shares. That's just short of the national average. But it is up from 7.5 percent in 1983.
Analysts believe that aside from the desire to make money, one motive for increased stock investment by Quebeckers has been ``nationalism'' - in this case, a desire for greater economic independence as well as pride in their own culture and language. Until recent years, the economy of the province has been dominated by English-speaking Quebeckers and outsiders.
Today, as a result of a rapid increase in the number of French-speaking entrepreneurs and in the amount of investment in their companies, French-Canadian businesses have become highly important to the provincial economy.
The Quebec Stock Savings Plan was designed to encourage this trend when it was introduced in 1979 by the then-governing Parti Qu'eb'ecois. It allows Quebec residents to deduct 50 to 100 percent of the cost of purchasing newly issued common stock in Quebec-based companies from their provincial taxable income. Since Quebeckers pay a combined federal-provincial tax of some 60 percent on incomes above $40,000 (US$28,800), the tax loophole has been popular.
Faced with huge budget deficits, the provincial government cut back the advantages of the tax break this year. Nonetheless, the Stock Savings Plan resulted in a rush of new issues this fall.
Small companies ranging from ski resorts to dressmakers were selling stock. Some issues prompted concern for unwary investors, although the risks were spelled out in prospectuses.
Saumier, however, notes that the attention given in the press to new shares of dubious value and the increasing sophistication of investors have resulted in some proposed issues being withdrawn and others scaled down in size or cut in price.
Some 40 of the 130 new listings on the Montreal Exchange this year result from the plan, Saumier figures. In the earlier 1970s, the exchange was getting only a few new listings a year.
Saumier calls on the provincial government to continue the tax break for two or three more years until the new equity investment psychology ``has taken root.''
In the meantime, that tax break and other changes introduced by Saumier and his predecessor, Pierre Lortie, have boosted the fortunes of the Montreal Exchange. Trading volume in the first nine months of this year amounted to 921 million shares of the 600 listed stocks, compared with 325 million shares of 450 listed stocks for the same period in '84.
That 1986 volume amounts to 21.2 percent of volume on the Toronto Stock Exchange, compared with 18.8 percent in 1984. In 1960, the Montreal Exchange was more important than Toronto's.
Saumier terms competition between the Montreal and Toronto exchanges as ``very healthy.''
Another goal of the Montreal Exchange is proving more difficult. It wants to lure investors from south of the border as well as Canada by listing shares of large European and other overseas companies.
To make listing simple, the exchange got permission from the Quebec Securities Commission to list these corporate securities without any more listing or disclosure requirements than those demanded of the overseas companies by their home governments.
Further, the shares will be valued in American rather than Canadian dollars, which should make it easy for smaller institutions and individual investors to buy and sell foreign shares.
But getting the listings has not gone quickly. Only two companies, Lyonnaise des Eaux of France and Latonia Investment Company of Switzerland, have signed up since sales efforts began last spring.