Market Surges After Short Selling Banned…
Disclaimer: As always AND before I go on, I’m not offering financial advice; you should always get qualified professional advice when making financial decisions. What I am doing is letting you know what has worked for me and giving you the opportunity to check it out for yourself. This message is intended to provide general news and information only. Readers should rely on their own enquiries before making any decisions regarding their own interests. Please do not rely on any part of this message as a substitute for specific legal or financial advice. All material is copyright 2008
The Australian sharemarket – AXJO - closed at 5020.50 a gain of 206.4 or +4.5% sharply higher today after a ban on short selling boosted stocks. Nearly $44 billion was added to value of the market today as investors digested the weekend’s news of an $840 billion rescue package for the US economy and the short-selling ban, which was announced by the Australian Securities and Investments Commission on Friday, and strengthened last night.Companies whose stocks had been decimated by short selling in recent weeks were the big winners today with Macquarie Group, Babcock and Brown and Fortescue Metals all rising sharply.
In summary what actually happened was that on 21 September 2008, ASIC released a press release ‘Covered short selling not permitted’. The effect of the action taken by ASIC is that naked short selling is banned and covered short selling is banned (subject to limited authorised market-maker exemptions).
ASIC has stated that it will reassess and advise the market in 30 days, whether or not it will at that time, or at a later date, reopen covered short sales for non-financial stocks. Please visit the ASIC website for more information.
Some of today’s market movers…
Asian markets also open higher today with gains on markets in
In an unusual move, the start of trading on Monday had been delayed for an hour while the Australian Securities Exchange sought to clarify if ASIC’s ban affected existing hedged positions taken prior to September 22 - it won’t.
Overnight, the Bush administration insisted Sunday that Congress must move quickly to approve what one lawmaker called the “mother of all bailouts” - a $US700 billion ($A841.04 billion) proposal to buy a mountain of bad mortgage debt in an effort to unfreeze the nation’s credit markets.
Congressional leaders endorsed the plan’s main thrust, saying passage might occur in a matter of days. But they said it must be expanded to include help for people on Main Street as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.
The proposal “does not include the necessary safeguards,” said House Speaker Nancy Pelosi. She called for “independent oversight, protections for homeowners and constraints on excessive executive compensation.” Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration’s measure, which was sent to lawmakers on Saturday, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression.
In yet another indication of how quickly events are moving, the Federal Reserve announced late Sunday that it had granted a request by Goldman Sachs and Morgan Stanley, the country’s last two major independent investment banks, to change their status to bank holding companies. The change will allow the two institutions to open commercial banking subsidiaries, greatly bolstering the resources of both institutions.
(Some of the above has been sourced partly from ninemsn Money 22/09/2008 5:00:00 PM & www.asx.com.au )
Always great to be with you as part of your journey and…
Remember… Live with Passion & Take Massive Action…
or go and build an ant farm… either way, I dare you! Yours with Ethics and Passion
George Mihos,
Disclaimer: Once again AS Always, I’m not offering financial advice; you should always get qualified professional advice when making financial decisions. What I am doing is letting you know what has worked for me and giving you the opportunity to check it out for yourself. This message is intended to provide general news and information only. Readers should rely on their own enquiries before making any decisions regarding their own interests. Please do not rely on any part of this message as a substitute for specific legal or financial advice. All material is copyright 2008
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