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Terrorist threats should not affect investment activity

By Peter V O'Brien

Friday 14th March 2003

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The New Zealand sharemarket has been tired since the end of last year and faces another possible disruption.

Already jittery at the prospect of a US-led but not UN-sanctioned war with Iraq, it now has to cope with the threat of a "demonstration of [terrorist] capability" in Auckland and Wellington at noon on March 28.

Noon on a Friday is lunchtime for at least half of the population working in Auckland and Wellington.

Investors' worst reaction would be the panic seen on September 11 (US time), 2001. That tells terrorists and nutters they succeeded in disrupting the normal activities of normal people.

An apparently deliberate "high noon" on March 28 could have "react immediately, think later" market operators involved in such disruption.

The best way for investors to handle the "demonstration of capability" could be to go into the markets, have a drink of water and/or watch a film.

OK, that might be potentially dangerous but giving into threats can be more dangerous.

There was an unreal element about the specificity of the warning. Terrorism has been based on surprise.

Issuing an actual time and date of activity could be an attempt to lay another false trail.

If so, it marks a change in tactics but not one that should affect investment activity.

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