ID :
20658
Tue, 09/23/2008 - 11:15
Auther :
Shortlink :
http://m.oananews.org//node/20658
The shortlink copeid
Swan warns of further market surprises
AAP - A further steep rally on the Australian share market may have brought back smiles to some investors, but federal Treasurer Wayne Swan has warned people not get too excited.
The Australian stock market romped a further 4.5 per cent higher in the wake of a
$US700 billion package announced on Friday by the US government intended to buy-up
"toxic" debt in US financial system, and a total ban locally of short selling for 30
days.
US sharemarkets also posted a strong rebound on Friday.
But Mr Swan warned there could be further unpleasant surprises emanating from the
global financial crisis, even though Australia is well placed to weather the storm.
"We should not imagine that all will now be calm in the international financial
system," Mr Swan told parliament in a ministerial statement.
"Financial crises are unpredictable, and there will undoubtedly be further
unpleasant surprises and further volatility over the period ahead as the remaining
losses are worked through the system."
The country's securities watchdog - the Australian Securities and Investments
Commission - on Sunday announced a ban on all types of short selling for 30 days in
tandem with similar moves in the US and UK.
This extended Friday's announced ban just on so-called "naked" short selling.
Short selling is when an investor sells shares it doesn't own in anticipation of a
fall in a share price, then buys them back at a later date and pockets the
difference.
"While appropriately regulated and disclosed short selling has a role to play in the
effective operation of markets, it is appropriate to curtail its use at a time of
heightened market volatility," Prime Minister Kevin Rudd told parliament.
Mr Swan said some short selling practices are just big investors manipulating the
current circumstances to make money out of other people's misfortune.
But the federal opposition has slammed the Rudd government's handling over the ban,
which delayed the start sharemarket trading for an hour on Monday morning.
Newly appointed opposition treasury spokeswoman Julie Bishop said it smacked of
"panic" and "incompetence", and that only a few weeks earlier Regulation Minister
Senator Nick Sherry had dismissed the idea of any sort of ban.
"Why didn't they ban all short selling on Friday?," Ms Bishop asked in response to
Treasurer Swan's ministerial statement.
"If the excuse is that overseas regulators made subsequent changes, why isn't the
minister in close contact with these regulators as he claims?"
She said the uncertainty forced the Australian stock exchange to delay opening on
Monday to seek clarification from the corporate regulator about the decision to ban
short selling of shares in the local market.
"The Australian stock exchange had to close for an hour because of the confusion,
the incompetence of the Australian government on the issue of short selling," she
said.
"This sends a message of confusion and incompetence on the part of the treasurer, or
was it just sheer panic."
She said Mr Rudd had said on Monday that it was most important for political leaders
not to add to uncertainty.
"The opposition agrees whole heartedly with the prime minister, but we urge him and
his government to practise what he is now preaching," she said.
The Australian stock market romped a further 4.5 per cent higher in the wake of a
$US700 billion package announced on Friday by the US government intended to buy-up
"toxic" debt in US financial system, and a total ban locally of short selling for 30
days.
US sharemarkets also posted a strong rebound on Friday.
But Mr Swan warned there could be further unpleasant surprises emanating from the
global financial crisis, even though Australia is well placed to weather the storm.
"We should not imagine that all will now be calm in the international financial
system," Mr Swan told parliament in a ministerial statement.
"Financial crises are unpredictable, and there will undoubtedly be further
unpleasant surprises and further volatility over the period ahead as the remaining
losses are worked through the system."
The country's securities watchdog - the Australian Securities and Investments
Commission - on Sunday announced a ban on all types of short selling for 30 days in
tandem with similar moves in the US and UK.
This extended Friday's announced ban just on so-called "naked" short selling.
Short selling is when an investor sells shares it doesn't own in anticipation of a
fall in a share price, then buys them back at a later date and pockets the
difference.
"While appropriately regulated and disclosed short selling has a role to play in the
effective operation of markets, it is appropriate to curtail its use at a time of
heightened market volatility," Prime Minister Kevin Rudd told parliament.
Mr Swan said some short selling practices are just big investors manipulating the
current circumstances to make money out of other people's misfortune.
But the federal opposition has slammed the Rudd government's handling over the ban,
which delayed the start sharemarket trading for an hour on Monday morning.
Newly appointed opposition treasury spokeswoman Julie Bishop said it smacked of
"panic" and "incompetence", and that only a few weeks earlier Regulation Minister
Senator Nick Sherry had dismissed the idea of any sort of ban.
"Why didn't they ban all short selling on Friday?," Ms Bishop asked in response to
Treasurer Swan's ministerial statement.
"If the excuse is that overseas regulators made subsequent changes, why isn't the
minister in close contact with these regulators as he claims?"
She said the uncertainty forced the Australian stock exchange to delay opening on
Monday to seek clarification from the corporate regulator about the decision to ban
short selling of shares in the local market.
"The Australian stock exchange had to close for an hour because of the confusion,
the incompetence of the Australian government on the issue of short selling," she
said.
"This sends a message of confusion and incompetence on the part of the treasurer, or
was it just sheer panic."
She said Mr Rudd had said on Monday that it was most important for political leaders
not to add to uncertainty.
"The opposition agrees whole heartedly with the prime minister, but we urge him and
his government to practise what he is now preaching," she said.
