Muscovites: Want Shares In Boeing For 44 1/2?

SAN FRANCISCO - The crumbling, cash-starved Soviet Union may not look like a good source of investment capital, but that hasn't stopped Montgomery Securities from pursuing the first effort to sell U.S. stocks to Soviet citizens.

Through an arrangement with a fledgling Moscow brokerage that's a member of the even more fledgling Moscow Central Securities Exchange, Montgomery begins today to convert Soviet savings - now stuffed in mattresses and estimated to be worth $19 billion - into shares of stock in Boeing and seven other U.S. companies.

Seth Gersch, managing director of the San Francisco-based Montgomery, said he "likes the concept" of fomenting capitalism in Moscow, but "it would be very difficult not to exceed my expectations."

Today, Montgomery was to begin transmitting share prices to its Moscow-based partner, Sovlex, which will offer shares to the public. Montgomery will purchase the shares and hold them in custody on behalf of Sovlex.

"There is a very large underground investment community that needs to be flushed above ground," said Benjamin Lyon, vice president of the California-USSR Trade Association who helped bring Montgomery and Sovlex together. Lyon said many Soviets would prefer the stability of a U.S. company.

But Simon Johnson, an economics professor at Duke University's Fuqua School of Business, said Soviets would need assurance they could sell the stock and get their money back on short notice.

Gersch of Montgomery Securities noted that investing in U.S. stocks such as Boeing, closing at 44 1/2 a share today, along with BankAmerica, AT&T, IBM, Intel, Apple Computer, Hewlett-Packard and Compaq Computer - the eight that will be offered initially - would provide Soviet citizens a much better return than a mattress.

Yet with inflation running well into the triple figures and the buying power of dollars continuing to rise rapidly in the Soviet Union, stuffing hard currency into a mattress is actually a pretty good investment. "That's what I'd do," Johnson said.