Stock crash provides opportunities to profit
BUY, don't sell.
That was the message coming from brokerage firms yesterday after the Australian stock market suffered another black day.
Financial experts said savvy investors could emerge from the crisis in even better shape.
It was not all doom and gloom, they said.
"If you're an existing shareholder, you shouldn't panic," Macquarie Private Wealth consultant Simon Gamble said.
"If you have cash, there are selective opportunities to invest with a good prospect for a good return."
Mr Gamble believes investors should be eyeing bank stocks.
He said it was generally accepted Australia's banking system was in good shape, with little or no exposure to the sub-prime mortgage crisis in the US.
Leading bank stocks were very reasonably priced, he said, and the banking system was "fundamentally sound".
The Australian stock market closed down 4.3% yesterday, losing about $55 billion in value, as investors fled most sectors after the US Congress voted down a $US700 billion bailout package for financial firms. About $US1.2 trillion was wiped off Wall Street's value, its biggest one-day crash.
It sparked meltdowns on bourses around the world.
The Australian market fell about 5.5% in morning trade, carving roughly $65 billion off its value.
Heightened expectations that the Australian Reserve Bank could cut official interest rates by half a percentage point next week, to support the economy, prevented the market from mirroring a near 7% decline in the US market overnight
Respected broker Stephen Marshall urged investors to stay calm.
He agreed the current climate provided excellent opportunities.
"Long-term investors should be looking at this as an opportunity to purchase quality assets," he said.
"When the market turns, the big cap companies will turn around first."
Prime minister Kevin Rudd was out before the markets opened yesterday trying to soothe concerns.
He said the Australian financial system was well equipped to handle the global fallout in share markets.
"The circumstances of the Australian financial system and the Australian banking system are fundamentally different (from the US)," Mr Rudd said.
Financial experts may be telling investors not to panic, but not everyone is listening.
Association of Independent Retirees state president Helen Sava has lost confidence in superannuation fund management firms. Mrs Sava, of Buddina, took steps yesterday to manage her own super fund.
"I would imagine a lot of people with super funds will do the same thing," she said.