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| Traders work in crude oil pit at the New
York Mercantile Exchange on Monday. Crude oil rose to a 19-month
high. |
By Mike Sasges
The Vancouver Sun
Business BC
Tuesday, September 24, 2002
Bad news from technology and financial sectors triggered fall
while an analyst says, 'staying in this market is not for the faint
of heart.'
The Toronto Stock Exchange closed at a near four-year low on Monday,
slammed by news from the technology and financial sectors.
The benchmark S&P/TSX Index fell 121.95 points to 6080.08 (-2%),
its lowest close since Oct. 28, 1998. The benchmark slumped 4.5
per cent last week; it is down 20 per cent so far this year. The
Canadian Financial Index also dropped two per cent; the Canadian
Information Technology Index, 7 1/2 per cent.
But the energy index gained as crude oil rose to a 19-month high
after Iraq refused to accept any new United Nations' resolutions
on weapons inspections, raising the chances of a U.S. attack on
Iraq. "With Iraq rejecting resolutions we're another step closer
to a war," said Tom Bentz, an analyst and broker at BNP Paribas
Futures Inc. in New York. The rejection is "setting the stage
for the next disagreement with the U.S."
Adrian Mastracci, fee-only investment counsel
at Vancouver based KCM Wealth Management, says, “Staying with
today’s prolonged bear market, or making new investments,
means that your time horizon is at least five years. Stocks can
be risky if the time frame is less than five years.”
Royal Bank of Canada (RY: $50.26; -0.45) declined on speculation
that it may suffer even more from Enron Corp.'s collapse, speculation
prompted by release of a report on six partnerships the energy company
set up to help hide debts before spiraling into bankruptcy.
The partnership report identifies some of the world's top banks
as participants, including the Royal and Canadian Imperial Bank
of Commerce, Barclays Plc, Credit Suisse Group' Credit Suisse First
Boston, FleetBoston Financial Corp. and Cooperatieve Centrale Raiffeisen-Boerenleenbank
BA, also known as Rabobank.
The single largest transaction studied in the report involved RBC
and Rabobank. RBC lent an Enron affiliate $517 million in November
2000, and then swapped the loan to Rabobank. Rabobank has refused
to pay the $517 million owing to RBC as a result of the swap transaction
because it alleges that RBC ought to have known Enron was a house
of cards about to collapse.
RBC lent the $517 million to Enron to allow it to have one affiliate
buy a company, with a market value of $400 million, from another
affiliate.
The most actively traded financial, however, was the Toronto Dominion
(TD: $27.70; -.45), at 3.8 million shares. Its heavy lending to
the battered telecommunications sector has been acknowledged by
the Street with a heavy pounding of TD stock.
Nortel Networks Corp. dropped (NT: $1.07; -0.17) after JDS Uniphase
Corp., the biggest maker of parts for fibre-optic equipment, cut
its sales forecast and Lehman Brothers Inc. cut Nortel profit estimates.
Nortel was the most active stock on the TSX, at 17.064 million shares.
Vancouver financial counsellor Adrian Mastracci,
reviewing Monday's carnage on Wall and Bay streets, said ''staying
in this market is not for the faint of heart.'' But he wouldn't
take an abandon-all-hope position.
''Staying with today's prolonged bear market, or making new investments,
means that your time horizon is at least five years. Stocks can
be risky if the time frame is less than five years,'' said the president
of KCM Wealth Management Inc. (604-739-4500).
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