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Messy US election makes crystal ball gazing tricky

Friday 1st December 2000

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The New Zealand sharemarket performed reasonably well this year compared with the leading indices for major international markets. Table V shows movements in those indices on an end-month basis and the position on November 20 (November 17 for the US and UK.)

Of the six indices covered, only the Australian all ordinaries had a positive movement from the end of 1999 to November 20.

Volatility dominated Wall Street, in terms of both the Dow Jones industrial average and the technology-dominated Nasdaq.

The 8.2% decrease in the NZSE40 capital index and an 11.7% fall in the small companies index compared favourably with changes in the Dow Jones (a narrow sample), the Nasdaq, Hong Kong's Hang Seng index's 9.5% downer, a 7.1% cut in the UK's FTSE and an 18.9% slashing of Japan's Nikkei.

The last movement reflected Japanese and international dissatisfaction with the performance of the yen against the US dollar, which was a spinoff of relatively poor performance of the Japanese economy and the operations of the country's current government.

Matters were not helped by the on-again, off-again antics of Japanese politicians, who were said in November to be set to bring down the government, only to change their minds a few days later.

Everyone on the international scene was jittery about the US in late November when there had been no resolution of the presidential election.

At the time of writing, the issue could finish up in the US Supreme Court, or Congress, where people in both institutions would also be aware of the future historical assessment of their actions.

It is fair to say US people at a senior level generally have a deeper sense of their nation's history than New Zealanders have of ours and the possible outcome of future judgments.

The 25.6% drop in the Nasdaq index since the end of last year was the result of reality overtaking euphoria.

Nonsense is nonsense whether it exists in New York, Auckland or Wellington.

There are no predictions for 2001 for international investment markets in this survey. How could there be, when the world's economic powerhouse can mess up such a fundamental issue as a supposedly democratic election?



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