Canadian stock markets battle turmoil, too
``On Monday I called my wife in a panic and told her to cancel the decorator,'' said Toronto stockbroker Derek Russell. ``On Wednesday I called and asked her to get the decorator back.'' Mr. Russell's seesawing with the decorator reflects what happened in the market here this week. Back and forth, up and down, not always in line with the Dow Jones industrial average in New York, but as wild.
The Toronto Stock Exchange 300 index is the barometer for Canada's No. 1 stock market. The TSE does about 75 percent of the equity trading in Canada. And its index is closely watched.
Despite a midweek rally, the stock market here was still shellshocked. The TSE 300 index started the week at 3,589.26. On Monday and Tuesday it dropped straight down to 2,977.31. That is a two-day decline of 17.05 percent.
The Vancouver stock exchange was hit even harder. The west coast exchange, which deals mainly in speculative issues, dropped 23 percent Monday and Tuesday. It made a comeback midweek, but was still down significantly.
Program trading has not been the scapegoat in Canada that it has been in the United States. For one thing, there is only one futures exchange in the country, the Toronto Futures Exchange. It is considerably less active than the quietest American commodity market.
There was also a moratorium on program trading declared by the major brokers.
``We didn't trade on Monday or Tuesday,'' said Doug Steiner, a computer trading specialist who set up and now runs the program trading department at Dominion Securities in Toronto. ``The Canadian dealers felt the market should take its natural course,'' he said, sitting beside a whirring pair of linked Compaq 386s.
But on Wednesday, after the big two-day slump, Mr. Steiner and others were back to using computers to execute complicated trades, shaving a small profit on the difference between the basket of stocks that make up the TSE 35 - a special blue chip index - and the future traded against that index.
The leap forward was dramatic, but not as great as the loss of previous days. The TSE 300 composite index leaped ahead 268.87 points to close at 3,246.16 on Wednesday, a gain of 9 percent.
There is still a great deal of uncertainity in Toronto. ``We're expecting a `W' at the bottom,'' said Barbara Kinnear, an analyst and institutional trader at the Toronto firm of Deacon Morgan McEwan Easson. ``That means the market will slide down to the bottom, bounce back, and slide down again. You'll see a lot of people selling into rallies.''
Many companies bought back their own stock at bargain prices. The Toronto Stock Exchange was swamped with calls from companies seeking permission to enter the market and buy back their stock. Company executives said the slide was temporary and these prices would never be seen again.
``The confidence is gradually starting to return to markets,'' said a Toronto analyst.
And a final word on the Toronto market from banker M.W. Wilson, speaking in the Toronto Globe and Mail.
``It would, in my opinion, be a mistake to think that the sharp decline in stock market quotations in Canada reflects a corresponding change in fundamental business conditions. These conditions are sound, and there is no reason for pessimism.'' That was from the Globe and Mail of late October - late October 1929.