Blood on the street
August 16th 2007 11:14
It is not too much to say that many investors would have felt their knees giving way when they saw the Australia sharemarket plunged more than 5% today. A combination of technical glitches in the Sydney Future Exchange and the current credit slump caused investors to dump physical positions when hedging was halted by the ASX.
And it is not too much to say it caused 'blood on the street'. But thankfully it was just a technical glitch and not anything information-induced plunge which at the end of it, the market closed with a lesser loss of 1.32% ending at 5711.5 points for the benchmark ASX S&P 200 index.
Government officials from the US to Australia reassured investors that all is well. Treasurer Peter Costello affirmed that the local financial system is not exposed to the sub-prime crisis in the US. On the other side of the Pacific Ocean, US Treasury Secretary Henry Paulson is confident that the US economy will not slide into recession.
Wall Street Journal reports:
'
"The economy and the markets are strong enough to absorb the losses," he said. He said the repricing of risk is to be expected, and steps should not be taken either to guarantee players from potential losses or to inhibit them from taking risk. "When you have periods of benign markets... market participants aren't going to be as vigilant as they should be," he said. "One of the natural consequences of the excesses is that some entities will cease to exist." Paulson argued that the relative strength of the global economy differentiates this period from 1998, when Russia's default on its debt and currency devaluation and the subsequent collapse of hedge fund Long Term Capital Management precipitated a tightening of the credit markets.'
Meanwhile on the ground level, this writer found that some individual investors are actively looking for bargain shares during time of turmoil. They are scanning shares that are excessively 'oversold' but with strong fundamentals internally and externally. So much so that these collection of investors are grouping together to compile their individual survey and analysis of cheap shares.
At least the sentiments from this corner of the investment community are seeing some bright sparks forward in time. But does it tell us anything? Time will tell.
And it is not too much to say it caused 'blood on the street'. But thankfully it was just a technical glitch and not anything information-induced plunge which at the end of it, the market closed with a lesser loss of 1.32% ending at 5711.5 points for the benchmark ASX S&P 200 index.
Government officials from the US to Australia reassured investors that all is well. Treasurer Peter Costello affirmed that the local financial system is not exposed to the sub-prime crisis in the US. On the other side of the Pacific Ocean, US Treasury Secretary Henry Paulson is confident that the US economy will not slide into recession.
Wall Street Journal reports:
'
"The economy and the markets are strong enough to absorb the losses," he said. He said the repricing of risk is to be expected, and steps should not be taken either to guarantee players from potential losses or to inhibit them from taking risk. "When you have periods of benign markets... market participants aren't going to be as vigilant as they should be," he said. "One of the natural consequences of the excesses is that some entities will cease to exist." Paulson argued that the relative strength of the global economy differentiates this period from 1998, when Russia's default on its debt and currency devaluation and the subsequent collapse of hedge fund Long Term Capital Management precipitated a tightening of the credit markets.'
Meanwhile on the ground level, this writer found that some individual investors are actively looking for bargain shares during time of turmoil. They are scanning shares that are excessively 'oversold' but with strong fundamentals internally and externally. So much so that these collection of investors are grouping together to compile their individual survey and analysis of cheap shares.
At least the sentiments from this corner of the investment community are seeing some bright sparks forward in time. But does it tell us anything? Time will tell.
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