$75 billion lost in Monday mayhem on Toronto exchangeOctober 7th, 2008 - 9:54 am ICT by IANS
Toronto, Oct 7 (IANS) The US meltdown caused further mayhem on the Toronto Stock Exchange on the opening day of the week as the index plummeted a record 1,200 points just after trading started.Investors lost a whopping $75 billion Monday as the composite index closed 573 points down since Friday on North America’s third largest stock exchange.
Last week, Canadian investors lost $150 billion as the TSX index went into a free fall before the $700b US bail-out. However, the bail-out failed to calm markets as prices of oil and commodity (Canada’s main exports) shrank and credit crunch loomed.
The TSX index, which fell below the 10,000-point for the first time since 2005, was down 5 per cent by the end of what many called yet another black Monday.
During the early hours of trading, the index sank 1,200 at one point as investors offloaded shares amid prevailing volatility in world markets.
As crude prices slipped below $90, the Canadian dollar, which sank almost five percent against the US dollar last week, lost another one and a half per cent of its value against the greenback. At the end of the day, the loonie - as the Canadian is called - stood below 91 cents US.
More than $600 billion has been wiped off the Toronto stock exchange since May when the TSX index crossed the historic 15,000-mark for the first in its more than 150-year-old history.
As the Wall Street meltdown continued to rock markets, the country’s finance minister, Jim Flaherty, once again stepped in to calm investor jitters
“Canada’s financial system has handled the persistent global market turmoil very well. Canada’s banks and other financial institutions are sound and well-capitalized, and are less leveraged than their international peers,’’said Flaherty.
“Canadian institutions have met, and continue to meet, their capital requirements. The IMF has concluded that Canada’s financial system is mature, sophisticated and well-managed, and able to withstand sizeable shocks,” he added.
Nonetheless, he added, “Canada’s financial system is not immune to the ongoing turmoil in global credit markets. The deterioration of global credit markets is beginning to squeeze the ability of even the strongest of financial institutions to raise longer-term funds, which could limit the provision of longer-term credit in Canada to businesses and households.”
To meet the deepening credit crunch, the Bank of Canada last week announced to pump another $12 billion dollars into the market, in addition to the $8 billion already announced by it.
The finance minister said, “The government stands ready to take whatever actions may be necessary to protect the stability of the Canadian financial sector.”