1. GLOBAL MARKETS MONITOR Global Markets Division
Wednesday, September 12, 2001 International Capital Markets Department
Dow 9 ,60 6 (0 %) Nik kei 9 ,61 0 (-6.6%) US 3 0 -Yr. 5 .44 % (4 bp) € 0 .90 7 (-0.7%)
Nasdaq 1 ,69 5 (0 %) FT SE 4 ,88 2 (2 .9 %) EM BI+ n .a. n .a. ¥ 1 19 .5 (0 %)
Global Markets US financial markets were closed again today.
The stock exchanges are in consultations with
regulators about reopening and will possibly be
There do not appear to be any signs of major
open tomorrow. Decisions are expected later
systemic strains in global financial markets in
today. US stocks did not trade in Europe today.
spite of the spike in asset market volatility seen
The Chicago Board of Trade said its electronic
since the terrorist attack on American civilian
brokerage screens would be up and running this
and military targets yesterday. While anecdotal
evening. The feared deaths of many traders,
evidence so far suggests there may have been
especially those trading on the Nasdaq, may also
some temporary delays in clearing and
affect trading and liquidity on bourses when they
settlement systems in the US, and the inability
reopen.
of some investor counterparts to meet margin
calls with their brokerages, the extraordinary
Bond markets were closed on the
situation appears to have led market participants
recommendation of the Bond Market
to use discretion in allowing orderly settlement
Association. The trade group would assess the
of positions and few forced liquidations. The
situation “day by day.” The destruction of
Federal Reserve Bank of New York pumped
Cantor Fitzgerald, which trades about a quarter
more than $38 bn in reserves into the US
of US government bonds, had reportedly caused
banking system, about 10 times size of a
some settlement problems yesterday which
regular daily action, to ease fears of a possible
appear to have been resolved. Dealers were
banking cash crunch. This is in addition to the
reportedly quoting some prices in London in an
$80 bn added to the financial system by the
appearance of business as usual, but only in an
ECB, Swiss National Bank and the Bank of
effort to roll over positions through Monday and
Japan. The US Federal Reserve and the Bank
not to allow new position taking.
of England have reportedly asked central
banks to limit hard currency denominated
On the major foreign exchange markets, the
operations to curb excessive volatility.
euro is stable against the dollar while the yen is
0.7% lower. Trading in London was only half
Heightened risk aversion and volatility set
the normal volume. Despite the lack of liquidity,
today’s tone for market movements worldwide.
dealers reported they were not having difficulty
There is growing sentiment the attacks will
closing positions on the spot market, but said
deepen the current economic slowdown and
derivatives were proving difficult to execute as
erode consumer confidence. Bank of England
the forward market was extremely thin. ACI, the
governor George said the major economies
international financial market association, said
would have the scope to respond to any
payment systems seemed to be working in
economic problems resulting from attacks on the
Europe and the US.
US, but that coordinated interest rate cuts were
very unlikely. Spikes in commodity prices are
European stock markets gained 1-3% today
expected to be temporary.
after the injection of liquidity, providing relief to
shaken global markets. But trading was thin and
investors moved into defensive stocks such as
This is an internal document. It is produced by the Global Markets Division (GMD) of the International Capital Markets
Department. It reflects GMD staff’s interpretation and analysis of market views and developments. Market views presented may or
may not reflect the consensus of all market participants. All data and information are from market sources unless otherwise noted.
GMD staff do not independently verify the accuracy of data, statistics or events presented in this document.
Page 1
2. Global Markets Monitor Wednesday, September 12, 2001
pharmaceuticals (up 7%). Oil shares fell back intervening in the foreign exchange markets and
sharply after oil prices dropped. British Telecom that yesterday’s 1.1 bn reais debt auction would
jumped 10.8% and Alcatel 9.5% due to an instead take place today. Moreover, the central
expected increase in both telecom and security bank stated that it stood ready to provide
services. Airlines and hotels are still down additional liquidity to any Brazilian commercial
sharply. Insurance stocks swung wildly. bank that may need it. The Mexican peso
Moody’s estimated insurance claims in New rebounded strongly and rose 0.8% to 9.44 pesos
York at $10-15 bn. per dollar, as traders moved rapidly to take
advantage of the perceived overreaction
Trading in dollar-denominated emerging yesterday. With most local market participants
market bonds was suspended for the second generally long dollars, it is likely that follow-on
day in a row for most markets. Some trading by peso buying to unload dollars and to bring
locals in Russian 2030 bonds seems to have dollar/peso positions to neutral, would support
occurred, with prices lower, but not substantially the peso and trigger a rally as far as to 9.30
so. A handful emerging market bond trades were pesos per dollar. The Chilean pesos is also
also reported in London, but while bid/ask prices recovering and is currently trading 0.9%
are quoted, they do not seem to reflect actual stronger at 679 pesos per dollar.
trading, but rather a wish to express “business as
usual.” European and Asian companies canceled Argentina
$4.4 bn of equity and bond sales. PLDT With the interbank market open, overnight peso
postponed an investor meeting in Hong Kong. It call rates backed up 500 bps to 15%. No quotes
had planned to buy back $329 mn of bonds and were available for the 30-day interbank rate.
sell new 10-year bonds for $250 mn. While central bank liquidity injection data had
not been released for today, the central bank did
inject around $7 mn yesterday.
Latin America
Brazil
Inflation slowed in August, according to the
Several regional equity markets reopened for
IPCA index. Following July’s substantial 1.33%
trading today, with the notable absence of
mom increase, August’s inflation index
Argentina and Mexico. Market movements are
registered a 0.7% mom rise, which was broadly
mostly stable, with some signs of a recovery. At
in line with market expectations. The absence of
the time of writing, the Brazilian Bovespa had
government controlled price increases were seen
recovered 3.3% of yesterday’s loss. Investors
as an important contributing factor for the
were seen moving back into telecom and in
decrease in inflation.
particular oil stocks, such as Petrobras, since the
general view is that the stock market overreacted
yesterday. Other regional markets were mixed
Emerging Europe, Middle East & Africa
with the Chilean bolsa posting a 1.5% rise, while
the Colombian stock index is showing a loss of
1.2%. Regional equity markets ended the day on a
substantially weaker note today in spite of a
rebound in Western European courses as
Trading in the major regional currencies
reduced appetite for risk led investors to switch
resumed this morning, with most of them
into safe haven country bonds, commodities and
showing signs of recovery following yesterday’s
precious metals. Markets across the board failed
sell-off. The Brazilian real, however, went
to reverse the gloom evident at market opening
against broader market developments and was
Wednesday with telecom stocks seen as
trading 0.5% weaker at 2.68 reais per dollar.
particularly vulnerable to heightened risk
The central bank announced that it is still
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3. Global Markets Monitor Wednesday, September 12, 2001
aversion. The Czech PX-50 closed down 2.8%
to a 3 year low in higher than average volume. Czech Republic
The Polish WIG-20 is down 3.7% for the day. The MoF is reportedly considering a delay
The Hungarian BUX closed 4.0% lower. The until next year of the sale a stake in Cesky
Russian RTSI closed 5.3% lower today as the Telecom. While the results of a tender were due
early morning rout failed to reverse. The South to be submitted to the cabinet by late October,
African bourse recovered from losses of around but the purchase of shares in its mobile phone
6% and to close about 4.1% lower. unit Eurotel (from AT&T and Verizon) appears
to be causing the delay in the sale of Cesky.
Regional currencies failed to recover from
earlier weakness and closed down against the South Africa
dollar Wednesday. The Czech koruna closed The Reserve Bank injected 600 mn rand
0.4% weaker, while the Hungarian forint closed ($69.7 mn) into domestic capital markets today
0.9% weaker while the Polish zloty closed to maintain liquidity in local markets in light of
virtually unchanged. The ruble closed 0.4% the heightened volatility.
weaker after initial dollar sales were reversed.
The South African rand weakened 0.3% while
the Turkish lira closed 2.4% weaker. The central
bank of Turkey was reported to have intervened
in markets as some nervousness at the retail
level was seen pressuring the currency. Local
currency bonds were mixed in the region with
risk aversion concerns offset by expectations of
a US interest rate cut.
Global Markets Division, International Capital Markets Department:
Bankim Chadha, Chief Jens Nystedt, Economist
Gabrielle Lipworth, Senior Economist Srikant Seshadri, Economist
Chris Morris, Senior Economist Mazen Soueid, Economist
Anna Ilyina, Economist Martin Edmonds, Sr Fin Sys Officer
Subir Lall, Economist
Page 3
5. DOW
NASDAQ
0.0 0.0
GERMANY
1.5
-6.6
UNITED KINGDOM
2.9
JAPAN
ARGENTINA
0.0
BRAZIL
-8.9
MEXICO
0.0
3.4
HONG KONG SAR
SINGAPORE
-7.4
INDONESIA
-3.5
KOREA
-12.0
Global Markets Monitor
MALAYSIA
Equities
0.0
PHILIPPINES
TAIWAN Province of China
-4.1
THAILAND
0.0 0.0
CZECH REPUBLIC
-2.8
HUNGARY
-4.0
POLAND
-3.7
RUSSIA
SOUTH AFRICA
-4.1
-5.3 0.0
TURKEY
0
1
2
3
-4
-3
-2
GERMANY
UNITED KINGDOM
-1 -0.7-0.7
JAPAN
0.0
ARGENTINA
0.0
BRAZIL
-0.5
MEXICO
0.8
HONG KONG SAR
0.0
SINGAPORE
0.7
INDONESIA
0.6
KOREA
-0.1
MALAYSIA
0.0
PHILIPPINES
Currencies
TAIWAN Province of China
0.2 0.3
THAILAND
0.0
CZECH REPUBLIC
-0.4
HUNGARY
-0.9
POLAND
0.0
RUSSIA
SOUTH AFRICA
-0.4 -0.3
TURKEY
Page 5
Wednesday, September 12, 2001
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