Winnipeg Free Press

Winnipeg Free Press (Newspaper) - September 18, 1998, Winnipeg, Manitoba Friday september 18. 1998 b6 editor Steve Pona/697-7235 email Pona free press my Ca Winnie free press business interest rate uncertainty starts a slide markets loonie take trip South by Michael Macdonald Canadian press Toronto share prices plunged worldwide yesterday and the Canadian Dollar went along for the slide As investors worked themselves into a lather Over conflicting signals about . Interest rates. On Bay Street the tse 300 Index lost 180.25 Points to close at 5,725.80 As investors reacted with indignation to reports that world leaders have no plan to get together and Cut interest rates. Interest sensitive stocks particularly in the banking sector were among the hardest hit. Technology stocks were also mangled. Canadas High tech giant Northern telecoms saw its shares drop 12 per cent to $68.80 on 6.2 million shares traded. Meanwhile in the currency markets the loonies Steep dive was breathtaking. It lost almost three quarters of a . Cent to close at 65.33 cents us. But currency watchers were Quick to note the Dollar remains much stronger than it was Only three weeks ago when it traded at a record Low of 63.09 cents us. A this is disappointing but the dollars come a Long Way a said Jeff Cheah analyst at Standard and poor smms. Still the loonies latest woes did no to help the Stock markets which suffered heavy losses after a wave of panic Selling swept across Asia swamped Europe and pounded North America. A a it a Sloppy and ugly a said Conor Bill director of equity trading at Scotia capital markets. On Wall Street the Dow Jones Industrial average went into a nose dive in Early trading dropping More than 235 Points. A round of bargain Hunting in the afternoon eased some of the pain As the Dow closed at 7,873.77, Down 216.01. Bill said Stock and currency traders were still miffed by comments made wednesday by Alan Greenspan head of the . Central Bank. Speaking to a . Congressional committee the head of the . Federal Reserve revealed there were no plans to bring Down interest rates in countries with Strong economies such As. The United states. That comment seemed to contradict the hints Greenspan dropped sept. 4, suggesting the . Central Bank was preparing to lower rates to stimulate the american Economy. Indeed speculation of a coordinated round of rate cuts picked up monday when . President Bill Clinton said the worlds Industrial Powers should abandon fears of inflation and unite to Spur economic growth. A those expectations Are being scaled Back and we re seeing profit taking on the Canadian Dollar a said Harvinder Kalirai economist at idea inc. In new York. The Bank of Canada entered the currency markets yesterday buying Canadian dollars to keep the loonie afloat. But All the Bank a spending Only slowed the dollars dramatic decline. In the end the Dollar lost 0.72 of a . Cent. That Means the loonie dropped 1.26 cents us in the last three trading Days. Before Greenspan spoke earlier this week currency traders had expected the . Economy would grow once interest rates were lowered. That w Ould have spurred demand for Canadian exports and the loonies needed to buy them. Right on the Money again it was a year ago this week that i wrote about Winnipeg Money manager Patrick Cooney and his grim Outlook on world financial markets. His was an unfashionable and frightening vision one that Shook up a lot of Reader s. It was the unbridled optimism for the markets future and the euphoria with which the Man in the Street was socking his life savings into Mutual funds and rising Stock markets that had Cooney worried. For the head of Gordon private client corp., it was a sign that things were about to sour perhaps dreadfully so with at least a major correction and possibly a Market crash. The average investor could be crushed. Since then Stock markets and currencies the world Over have been gripped by uncertainty and declines. Some fear the Start of a prolonged slide a a Bear Market a while others see opportunities that might extend the life of this troubled Bull. I asked Cooney what he thinks about these developments now and his submission follows. Next Friday Well present the View of Tom Waitt senior vice president of the Manitoba Saskatchewan division of Nesbitt bums. Steve Pona business editor a weathering the storm could leave you devastated the average individual investor has been indoctrinated to believe that the Way to manage risk in the Stock Market is to be a a buy and hold investor and a weather the the theory goes that if your investment time horizon is lets say five years you should not try to make any a Short terms Calls on the Market. In reality t his can be a very foolish decision. Here a Why this View in my opinion ignores the lessons taught us by history. Every asset major theatre chains Ponder multiplex in West end r =. Patrick Cooney is managing director of Gordon private client corp. Class goes through cycles when there is time to buy hold and sell. Knowing when to sell is the hardest decision to make. This is an essential part of managing your assets and it should be a part of your investment strategy. The japanese nikkei Index peaked in december 1989 at 38,915 and then fell. After nine years this Index is still Down More than 60 per cent. That is a Bear Market. Clearly a a buy and hold strategy did not help investors in this Market. For reasons unknown to us investors in the North american Market believe that a protracted Bear Market cannot happen Here that the most that can happen is a correction. I believe we Are going into a Bear Market and that its already begun. Canadian Bank stocks for example Are off substantially in the last month. When we look at the markets in Europe and North ame Rica we notice three alarming trends a the Market is trading at an unusually High level relative to Long term moving averages. A the equity markets have really been in a Bull Market since 1982. In the history of financial markets we have never seen a run up in Stock values like this a its unprecedented. As with any economic Cycle if you have a longer run up what does this imply about the offsetting Cycle it just makes economic sense the offsetting Cycle w ill be longer and More protracted. Conf a used please see v0latility/b7 Iken free press Robins Lef Lisso with an artists drawing of the proposed new a Power Centre on Portage Avenue. A Power Centre to Rise on uni City mall site by Murray Mcneill business reporter Winnipeg could be in line for another state of the Art movie theatre Complex this time in the West end of the City. Officials with the firm that owns uni City shopping mall said yesterday that Canadas two major movie theatre chains a famous players theatres and Cine Lex Odeon a have both expressed an interest in building a new Multi screen theatre Complex in the new $40-Mil lion a Power Centre Quot that will be built next year to replace the existing shopping Centre. A Power Centre is a group of freestanding stores and buildings with integrated themes and parking and a common Street Access. Adair Lisso and Jordon Robins of Toronto based first professional management inc., said they Hope to know within a couple of months whether the movie theatre proposal is a go. A a it a not 99 per cent sure a Lisso said a but it looks like its going to if it is a go the new facility w Ould be similar to theatre complexes that opened recently in the st. Vital and Grant Park shopping centres Lisso said. It would include 10 to 12 movie screens and such state of the Art features As stadium seating and sur round sound stereo systems she said. Grant Nordman executive director of the Assiniboia chamber of Commerce said a new movie theatre Complex would be Good news for the residents of st. James Assiniboia. A a facility like a multiplex movie theatre is 25 years overdue a Nordman said noting that with the closings of the Kings theatre and the Polo Park Cinema there Are no movie theatres West of Grant Park shopping thrilling Lynda Henson executive assistant to City councillor Pat Phillips st. Charles said Phillips is thrilled about the possibility of a theatre Complex being built in the area. A a we be been try ing to get something like this for a Long time a Henson said. Lisso and Robins were in Winnipeg to attend a Public information meeting today at uni City. At the meeting they were to unveil an artists drawing of the proposed new Power Centre and explain to area residents Why first professional has decided to demolish the existing enclosed shopping Centre and replace it with a Power Centre. Robins said one of uni City a Anchor tenants a Wal Mart a has already signed on As a tenant in the new Centre which will be the first of its kind in Winnipeg. A tentative Deal also has been reached with Canadian tire. Robins said the new 350,000 to 400,000-Square-foot Centre will probably include Between 11 and 20 buildings depending on we hich tenants Are signed up. Other retailers first to fess ional is negotiating with include roots Danier leather winners and club Monaco he said. He and Lisso said first professional opted to demolish the existing mall because its been a Money loser since the Day it opened in 1972, and because it faced the Prospect of losing All three of its Anchor tenants next year. The Bay and , Safeway already plan to leave when their leases expire next year and Wal Mart said it w Ould stay if the mall was redeveloped Lisso added. Manitoba absorbs Shock diversification helps growth rate avoid asian flu says Board by Geoff Kirby son business reporter despite dramatic downturns in the global Economy Manitoba a diversified Economy is helping insulate the province from shocks that set it apart from the rest of Canada say two leading economists. The provinces position was affirmed yesterday by a Rosy economic Outlook from the conference Board of Canada. Manitoba a growth Wal so w to 3.3 per cent this year and 3.1 per cent in 1999, Down from 4.6 per cent in 1997, according to the conference Board but still above the National averages of 3.1 and 2.9 per cent. The numbers Are even More impressive when the worlds economic turmoil is taken into account said Peter Hall associate director of economic services at the conference Board and author of the report. Manufacturing construction and wholesale and retail Trade will All perform exceptionally w Ell in Manitoba in 1998, growing by More than six per cent according to the research group. Unemployment is expected to drop to 5.0 per cent in 1999, second Only to albertan a 4.4 per cent projection. John Mccallum an economist in school of business at the University of Manitoba Calls the Manitoba Economy the Best provincial economic Story of the last 10 years in Canada. A we have a highly diversified Economy so i would expect that even in a downturn we wont be Hurt As much As others. As Long As interest rates stay Low the Dollar slays Down the . Economy stays Strong and Manitoba Confidence stays High we May do bet conference Board of Canada o the expected provincial real Gap growth rates for 1998 and 1999 released thursday. Newfoundland 4.8 % 1 6.7 Prince Edward Island a a 0.7 i 12.0 Nova Scotia 4.1 3 2.1 new Brunswick 2.4 z3 3.0 Quebec 2.5 1 2.4 Ontario 4.0 3.4 Manitoba Saskatchewan i 3.3 3.1 2.7 Alberta 3 2.9 3.4 3.6 British Columbia a 0.3 1 11,8 a 1998 1999 source conference Board of Canada up ter than 3.1 per cent growth next year a Mccallum said. He cited the development of the hog Industry during the last decade the diversification in financial services by great West life investors group and Wawanesa life insurance co., the growth of transportation Man fac luring at Bristol aerospace Ltd. And new flyer industries Ltd. Among others and the shifting of crops into potatoes peas Beans lentils and canola for Manitoba a increased insulation from events outside the provinces control. A when you add it All up this is a highly diversified highly competitive Economy a Mccallum said. He has some concerns that some world events Are beyond Manitoba a control however. A there Are More w orries than Normal in the Economy at the moment and there san awful lot of uncertainty that has developed about Canada Over the last four British Columbia continues to be victimized by the asian flu but Newfoundland a Newborn Oil Industry has catapulted it to the top among the provinces with 4.8 per cent growth expected this year and 6.7 per cent in 1999. Increased shrimp crab and cod quotas w ill propel real fishing output by 14.4 per cent and fish processing activity combined w Ith a rejuvenated shipbuilding Industry to expand real manufacturing by 6.5 per cent in 1998. Wilf Falk chief statistician at the Manitoba Bureau of statistics said the conference boards projections w Ere slightly higher than those of six other economic reports. The average estimate for Manitoba a growth this year by the economists of the big five Banks plus data resources International and the conference Board is 3.2 per cent with a Range from 2.7 to 3.7 per cent. Projections for 1999 average 2.5 per cent ranging from 2.0 to 3.1 per cent. Hall said his organization is bullish on Manitoba and the Prairies in general. A a we w Ere w worried about the Manitoba forecast at the beginning of the year because of the asian crisis and possible drought caused from the hangover from al Nino a which obviously did no to occur a Hall said. Continued please see pra1ries/b7 ;