DJIA 7782.37 -45.06 (-0.58%) S&P 500 990.48 -3.78 (-0.38%) Nasdaq 1592.85 +17.76 (+1.13%) Value Line ndx 768.66 +6.19 (+0.81%) 30-Year Bond 102 13/32 unch 5.34% Yield
Several banking and brokerage stocks rose today despite more reports of trading losses due to Russia's new glas-toast economic policy. Instead of fleeing, investors appear convinced that most of the bad news streaming from Russia and other emerging economies was priced into most trading firms' share prices earlier this week, suggesting it's now safe to get back into the financial services pool. Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> rose $2 1/8 to $108 3/4, Morgan Stanley Dean Witter <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWD)") else Response.Write("(NYSE: MWD)") end if %> added $1 11/16 to $59 5/16, Donaldson, Lufkin & Jenrette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> picked up $1 3/4 to $34 1/8 after each projected the severity of their Russia-related losses last night. Elsewhere, Lehman Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> climbed $2 1/2 to $42 1/8, BankAmerica <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> tacked on $1 1/4 to $65 3/4, and Bear Stearns Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSC)") else Response.Write("(NYSE: BSC)") end if %> rose $1 11/16 to $39 7/16.
Investors jumped back onto the Internet stock bandwagon in droves today, exhibiting the kind of enthusiasm normally reserved for Washingtonians when the Redskins put together a three-game winning streak. News of a three-year partnership with privately held online trading community eBay worth $12 million in guaranteed payments helped boost Internet conglomerate America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> $3 to $88. Portal company Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> traded up $5 1/2 to $77 3/4 after being chosen to replace MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %> on the Nasdaq-100 Index. The Yahoo!-ligans also expanded their global merchant agreement with Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %>, sending the online bookseller's shares $7 15/16 higher to $87 7/8. Elsewhere, Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> advanced $1 1/2 to $22 5/8 after saying 750,000 Web users registered for its Netcenter portal site in August, and Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> rose $3 11/16 to $27 11/16 after Morgan Stanley Dean Witter started coverage with an "outperform" rating.
QUICK TAKES: Computing products and services company IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> gained $2 9/16 to $120 1/2 after signing a 10-year, $3 billion information technology support partnership with British telecommunications company Cable & Wireless PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CWP)") else Response.Write("(NYSE: CWP)") end if %>... New media marketing company CKS Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CKSG)") else Response.Write("(Nasdaq: CKSG)") end if %> jumped $1 1/8 to $15 1/4 after agreeing to merge with online development services firm USWeb Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USWB)") else Response.Write("(Nasdaq: USWB)") end if %> in a stock swap valued at about $344.4 million. USWeb dropped $2 1/8 to $12 5/16... Mac, iMac, and computing products developer Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> gained $1 7/16 to $35 9/16 after CEO Steve Jobs told a conference in San Francisco that the company is shipping "tens of thousands" of its new iMac computers each week and that the machine is currently sold out in Japan for the rest of the month.
Photographic products company Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> advanced $2 11/16 to $82 5/8 after its Kodak Document Imaging unit won a $21.5 million contract from Japan's Postal Savings Bureau for document imaging hardware and data conversion services... Number four U.S. cable company Comcast Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMCSA)") else Response.Write("(Nasdaq: CMCSA)") end if %> added $1 7/8 to $39 3/4 after announcing a $500 million share buyback plan yesterday and receiving an upgrade to "strong buy" from "buy" this morning from SG Cowen... Internet service provider MindSpring Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSPG)") else Response.Write("(Nasdaq: MSPG)") end if %> bounded ahead $2 3/4 to $33 after launching a new version of its namesake website. Robinson-Humphrey also raised its short-term rating on the company to "strong buy" from "market perform"... Online audio streaming software developer RealNetworks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RNWK)") else Response.Write("(Nasdaq: RNWK)") end if %> tacked on $2 3/8 to $19 7/8 after BancBoston Robertson Stephens upgraded the company to "strong buy" from "attractive" late yesterday.
Aircraft, missiles, and rocket launch vehicles maker Lockheed Martin Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LMT)") else Response.Write("(NYSE: LMT)") end if %> moved up $2 1/8 to $92 3/8 after Merrill Lynch raised its intermediate-term rating to "buy" from "accumulate"... Software products developer Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %> climbed $1 1/4 to $31 3/8 on a Goldman Sachs upgrade to "market performer" from "market underperform"... Call automation systems developer InterVoice <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTV)") else Response.Write("(Nasdaq: INTV)") end if %> rang up $2 1/16 to $18 13/16 after pre-announcing fiscal Q2 revenues of $33 million and EPS between $0.29 and $0.31 per share, ahead of the First Call mean estimate of $0.23... BMC Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BMCS)") else Response.Write("(Nasdaq: BMCS)") end if %> gained $2 5/16 to $49 after SoundView Financial placed the systems management software firm on its "focus list." Network storage management software developer Legato Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LGTO)") else Response.Write("(Nasdaq: LGTO)") end if %>, which was also added to the same list, rose $4 to $44.
Internet service provider EarthLink Network <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELNK)") else Response.Write("(Nasdaq: ELNK)") end if %> orbited $6 1/2 higher to $33 1/4 thanks in part to an upgrade to "outperform" from "market performer" by Everen Securities... PC and computing products retailer CompUSA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPU)") else Response.Write("(NYSE: CPU)") end if %> tacked on $1 1/16 to $14 following a CS First Boston upgrade to "buy" from "hold"... Generic and proprietary drug developer Barr Laboratories <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BRL)") else Response.Write("(NYSE: BRL)") end if %> jumped $9 3/8 to $35 1/8 after the FDA approved its so-called "morning after" Preven Emergency Contraceptive Kit, which was co-developed with privately held Gynetics Inc... Interactive game maker Interactive Magic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMGK)") else Response.Write("(Nasdaq: IMGK)") end if %> levitated $2 higher to $8 1/2 after forming a partnership with Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> to provide its WarBirds game for Microsoft's Game Sampler, which will be included with the Windows 98 operating system.
Physician practice management software firm Medical Manager Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MMGR)") else Response.Write("(Nasdaq: MMGR)") end if %> moved up $2 31/32 to $17 7/32 after Prudential Securities raised its rating to "accumulate" from "hold"... Telecommunications services provider GST Telecommunications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GSTX)") else Response.Write("(Nasdaq: GSTX)") end if %> dialed up a $1 3/4 gain to $9 3/4 after winning a five-year, $2.5 million contract to provide all local phone service to Travis Air Force Base in California... Digital prepress printing services firm Katz Digital Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KTZ)") else Response.Write("(AMEX: KTZ)") end if %> gained $2 3/8 to $7 5/16 after agreeing to be acquired by Britain's Photobition Group for about $47 million in cash... Computer hardware and peripherals retailer CDW Computer Centers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDWC)") else Response.Write("(Nasdaq: CDWC)") end if %> climbed $5 1/8 to $41 7/8 after announcing a one million share buyback plan yesterday.
Fiber-optic transmission products maker Ortel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORTL)") else Response.Write("(Nasdaq: ORTL)") end if %> tacked on $2 1/2 to $16 1/2 after reporting fiscal Q1 earnings of $0.02 per share, beating the IBES mean estimate of a $0.01 per share loss... Property and casualty insurance company Gryphon Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GRYP)") else Response.Write("(Nasdaq: GRYP)") end if %> jumped $2 3/4 to $14 1/4 after specialty insurer Markel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MKL)") else Response.Write("(NYSE: MKL)") end if %> offered to buy the company for $18 per share in cash and notes. Markel rose $8 7/16 to $151 15/16 on the news... Biotechnology company MedImmune <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEDI)") else Response.Write("(Nasdaq: MEDI)") end if %> was lifted $8 7/8 to $52 1/4 after Prudential Securities reiterated its "strong buy" rating with a 12-month price target of $85 per share.
Electronics contract manufacturer and backplane manufacturer Sanmina Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SANM)") else Response.Write("(Nasdaq: SANM)") end if %> was short-circuited for a $2 1/8 loss to $25 1/8 after announcing this morning that it expects to report fourth quarter earnings of $0.38 to $0.39, below the mean estimate of $0.43. The company blamed the shortfall on "product shipment delays," very likely due to customer pushouts (requests to delay delivery of product). The company also announced the acquisition of Altron <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALRN)") else Response.Write("(Nasdaq: ALRN)") end if %>, a smaller circuit board manufacturer with 1997 revenues of $172.4 million. Although Altron recently agreed to acquire a Hewlett-Packard circuit board facility and showed Q2 revenue growth of $27%, 1997 was not a great year for the company. Revenue growth was under 5% and operating income fell 17.7%. However, Sanmina will be able to cut out some overhead and take out some industry capacity with this move, improving Altron's performance somewhat. Altron finished up $1 7/16 to $12 1/16.For more details, see today's Fool Plate Special.
Women's footwear designer and retailer Nine West Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NIN)") else Response.Write("(NYSE: NIN)") end if %> tripped for a loss of $5 1/4 to $10 7/8 in heavier-than-usual trading after announcing that it expects lower-than-expected full fiscal year earnings of $1.30 to $1.50 per share due to continuing weakness in the footwear market worldwide. That falls far short of last year's $2.23 per share in profits and the analysts' mean estimate of $2.08. Following the warning, Bear Stearns dropped coverage of the company. The company reported Q2 EPS of $0.60, a decrease from $0.78 in the same year-ago period. Nine West's profits have dropped for four consecutive quarters as the company has had to cut prices in the face of weak sales and rising inventories. The company has also been operating without a president since January and is being run by an executive committee.
QUICK CUTS: Dense wavelength division multiplexing (DWDM) systems maker Ciena <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> sank $5 5/32 to $28 15/32 and voice and data transport and access systems maker Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %> lost $2 3/4 to $43 3/4 after announcing they have postponed the September 9 shareholder votes on their proposed merger and now anticipate holding the special shareholder meetings in mid-November... Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %> was cut $1 13/16 to $59 15/16 as Addvantage Media Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADDM)") else Response.Write("(Nasdaq: ADDM)") end if %> said it has filed a civil complaint against the discount retailing giant for breach of contracts related to a past settlement between the two companies.
Consumer products powerhouse Proctor & Gamble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %> finished down $1 3/16 to $78 13/16 after reports that the company plans a major restructuring, involving a shift to product-based units from regional business units to boost sales and speed up the launch of new offerings... Party supplies retailer Party City Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PCTY)") else Response.Write("(Nasdaq: PCTY)") end if %> was a party pooper today, falling $5 9/16 to $10 11/16 after warning it expects to report a Q3 net loss of $0.15 to $0.18 a share, compared with a $0.02 per share loss last year, as a result of lower-than-anticipated sales in July and August. Analysts had predicted a loss of around $0.09 per share.
UniCapital Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UCP)") else Response.Write("(NYSE: UCP)") end if %> plunged $2 3/8, or 28%, to $6 1/8 after Morgan Stanley Dean Witter downgraded shares of the consolidator of equipment leasing and specialty finance businesses to "outperform" from "strong buy"... Holly Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HOC)") else Response.Write("(NYSE: HOC)") end if %> spilled $5 5/8 to $15 1/4 after announcing that it and Giant Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GI)") else Response.Write("(NYSE: GI)") end if %> have axed plans for Giant to buy the refiner for about $168 million because they couldn't reach agreement with the Federal Trade Commission over antitrust concerns... 3D graphics hardware and software developer Evans & Sutherland Computer Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESCC)") else Response.Write("(Nasdaq: ESCC)") end if %> dropped $2 1/8 to $15 5/8 after warning it expects Q3 to be slightly profitable with EPS of $0.02 to $0.04, compared with $0.35 in the prior-year quarter and analysts' expectations of $0.41.
Home Choice Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HMCH)") else Response.Write("(Nasdaq: HMCH)") end if %> shed $1 5/16 to $11 3/8 and Rent-Way Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RWAY)") else Response.Write("(Nasdaq: RWAY)") end if %> dipped $5/8 to $22 1/2 after announcing that Rent-Way will acquire Home Choice to become the nation's second largest company in the rental-purchase industry, operating 847 stores in 32 states... Circuit board components maker Park Electrochemical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PKE)") else Response.Write("(NYSE: PKE)") end if %> lost $7/8 to $12 1/2 after warning that Q2 earnings will be hurt by the Asian economic downturn and the loss of its largest customer, General Motors Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> Delco Electronics unit... Service contracts and extended warranties provider Interstate National Dealer Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ISTN)") else Response.Write("(Nasdaq: ISTN)") end if %> slid $7/8 to $7 1/4 despite reporting a 30% increase in revenues and EPS of $0.19, up from $0.17 a year ago and a penny ahead of estimates.
FOOL
ON THE HILL
An Investment Opinion
by
Louis Corrigan
Short Sellers Make Free Markets
American Depositary Receipts (ADRs) for numerous companies traded on the Hong Kong market enjoyed nice percentage gains today after the blue chip Hang Seng index shot up 293.2 points (or 4.2%) to 7355.67. At their highs, Jilin Chemical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JCC)") else Response.Write("(NYSE: JCC)") end if %> had gained $5/8 to $4 3/8, Shangai Petrochemical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SHI)") else Response.Write("(NYSE: SHI)") end if %> had rocketed $15/16 to $7 1/8, and Beijing Yanhua Petrochemical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BYH)") else Response.Write("(NYSE: BYH)") end if %> had added $1/2 to $3 1/4.
Unless you actively invest in emerging markets, this news probably isn't very exciting. The Dow's rally helped pump up the Hang Seng, allowing some stocks that had been slaughtered to bounce off their lows. Big deal! But the story's a little more interesting and potentially quite troubling for U.S. investors who now understand that the global economy's interconnections run through the even more sensitively intertwined financial markets. That's because today's rally in Hong Kong was partially triggered by new crisis-prevention measures that suggest this once vibrant financial market is becoming increasingly troubled.
To thwart speculators, the Hong Kong exchange today temporarily banned short- selling in three of its largest issues: Hong Kong Telecommunications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HKT)") else Response.Write("(NYSE: HKT)") end if %>, China Telecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHL)") else Response.Write("(NYSE: CHL)") end if %>, and HSBC Holdings PLC (OTC Bulletin Board: HSBHY). Traders hurried to cover their positions, sending these stocks up 8.6%, 11%, and 5%, respectively, in Hong Kong trading. According to news reports, this short-squeeze played a significant role in the Hang Seng's rally.
The crackdown on shorting followed Tuesday's action by the Hong Kong Securities Clearing Co. requiring that trades be settled -- that is, shares actually delivered -- two days after execution. Short-sellers sell borrowed shares hoping the stock will fall so that the shares can be bought back later at a lower price. Most U.S. investors (with the exception of market makers and NYSE specialists) must secure borrowed shares from a broker before a short trade can be executed. That rule apparently doesn't apply in Hong Kong. And given the heavy shorting last week, the change in the settlement date presented a serious burden. Indeed, as of yesterday, there were between 30 million and 110 million shares of each of the three affected stocks that had not been delivered on time.
One could argue that the stock exchange was simply reigning in speculation run wild, but the shorts had entered the market with such conviction partially because the Hong Kong Monetary Authority has over the last two weeks aggressively intervened to support the currency and the stock market. (Indeed, the monetary authority reportedly owns almost 9% of HSBC after the recent purchases.) This artificial stimulus left some potential buyers hesitant to enter the market since they remained uncertain of the "natural" market prices. Put another way, Hong Kong authorities today seem to have cracked down on speculation that their own recent intervention exacerbated by preventing market participants from working out the proper levels for themselves.
The concept of "free markets" is, of course, deceptive. Free markets are constructed through a host of complex rules, some of which allow for various forms of government intervention. The U.S. Federal Reserve, for example, regularly intervenes to adjust the money supply. And for years, Japan's government induced Japanese banks to support stock prices. Moreover, even the esteemed M.I.T. economist Paul Krugman recently suggested in Fortune that some decimated Asian economies would be smart to temporarily adopt currency controls. (Krugman also expressed support for the currency controls instituted today by the Malaysian government.) In other words, even free market advocates can believe that turning away from free market capitalism today may offer the best means for embracing it later.
Nonetheless, free marketers generally believe that the world economy is stronger to the extent that the leading economic powers are willing to answer to the market's discipline. Investors just don't like it when a country veers too far from its own specific commitment to free market capitalism because it suggests a certain amount of desperation. Speculators can smell desperation. And the recent actions by Hong Kong authorities -- especially the crackdown on short selling -- reeks. Shorts ensure a vibrant market that is free to respond honestly to economic realities. Reigning in short-sellers is the best way to foster an unsustainable bubble. That's why investors should worry about even the limited action taken today in Hong Kong.
Consider the NYSE's last major experiment in curbing short selling as a means of turning back a panic. Back on September 21, 1931, prior to the implementation of the securities laws that now structure our markets, the exchange was facing a financial crisis. The British government had abandoned the gold standard the day before and stocks were pummeled on the Paris Bourse, the only European market that had managed to open. The governing committee of the NYSE decided that it needed to provide buying pressure to support the expected sell-off, so short selling was suspended until further notice.
As NYSE president Richard Whitney said a month later, the committee believed that "a sudden ban on short selling would be likely to force covering by those who were short, thus steadying the market temporarily until the immediate shock of the London news could be dissipated." Over the next three days, speculators covered 1.4 million of the over 4 million shares short at the time, and the market stabilized.
Yet shorting was permitted again starting on September 24, and the market steadily declined over the ensuing two weeks. As Whitney put it, the "more cheerful appearance in the market" resulting from the halt in shorting "was not the glow of natural health but the flush of artificial stimulation." Indeed, it's interesting that the number of shares short actually dropped along with the market, standing at 2.6 million by October 5. So the market's decline over this period wasn't due to renewed shorting. Rather, it seemed to be a response to both the actual economic uncertainty and the destabilizing stimulation of the short selling ban itself.
"Within two hours after short selling was forbidden," Whitney said, "the Governing Committee found there was a real danger of technical corners and crazy and dangerous price advances." One stock opened at $48, shot up to $75, and then declined to $62. "Something had to be done immediately or otherwise the buyers would have bid frantically for the stock and a rapid and entirely unwarranted advance would have taken place," Whitney said.
In fact, the market was so volatile that even during the official suspension of short sales, the exchange did in fact permit some on a case-by-case basis simply to ensure liquidity in the market. As Whitney concluded, "These facts prove that a prohibition of short selling could not be enforced for even two hours without creating an unnatural and dangerous market."
Hong Kong today is not New York in 1931. The recent events in Hong Kong may prove nothing more than minor plot points in a continuing saga of global financial uncertainty. But just as miners don't want to see the canary snuffed out, investors should worry when shorts start getting shafted. We need regulators to foster potentially "unnatural and dangerous" markets about as much as a heart patient needs Viagra.
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