URGENT Tokyo, Hong Kong Stocks Fall As Cleanup Continues on Wall Street
NEW YORK (AP) _ The turbulence that shook the world’s stock exchanges last week continued Monday as prices dropped sharply on the Tokyo and Hong Kong markets.
The Tokyo Stock Exchange’s best-known indicator, the 225-share Nikkei stock average, had its third greatest single-day decline ever. It closed down 1,096.22 points to 22,202.56 after having been down nearly 1,680 points during the afternoon.
U.S. investors were looking to the Far East for the first indications of how the world’s markets would fare following last week’s volatility. Exchanges around the world formed a cyclical relationship last week, with foreign markets affecting and being affected by the activity in New York.
Ginger Tulley, an analyst at Vickers da Costa, said the plunge resulted from ″some indication of less confidence in the dollar.″
But she said there also was ″general fear and uncertainty, particularly over what’s going to happen in Hong Kong.″
Those fears were realized when prices on the Hong Kong Stock Exchange opened sharply lower in active trading Monday after a four-day suspension. Officals had hoped the hiatus would calm anxieties over market declines overseas, including the 508-point drop in the Dow Jones industrial average last Monday.
The Hang Seng index, the market’s prime gauge of blue chip stocks, was down 817.39 points to 2,545 at the end of the morning session. Last Monday, it dropped a record 420.81 points.
On Tuesday, the Nikkei index fell a record 3,836.48 points after Monday’s drop in the Dow Jones industrial average. The Tokyo market rebounded Wednesday, posting a record single-day gain of 2,037.32 points, followed by a 457.05-point gain Thursday. It then lost 1,203.23 points Friday and gained 97.56 points Saturday.
In New York on Sunday, Wall Street prepared for the new week by clearing out the debris left by last week’s turbulence. New York Stock Exchange employees and brokers continued to work on eliminating the backlog of paperwork from last Monday and Tuesday, when more than 1.2 billion shares were traded.
Richard Torrenzano, a spokesman for the New York Stock Exchange, said about a half to a third of the exchange’s 2,000 employees - who already had spent an unusual Saturday on the job - worked from 10 a.m. until the mid-afternoon to wrap up questioned trades. Those are transactions in which there were disputes about the number of shares or the price of a stock.
″They’re making sure that the trades match up, that you buy what you thought you bought and sell what you thought you sold,″ Torrenzano said. Reporters were not allowed into the exchange on Sunday.
The weekend overtime was necessary because Monday is settlement day for transactions that took place last Monday. Trades are settled - with money paid and securities delivered - five trading days after the transactions are made.
With the backlog out of the way, the exchanges would be ready for this week’s trading and brokerage firms would have a better idea of how they fared during a week that saw the Dow Jones industrial average plunge 508 points in one day, then recover some ground to close out the week with a loss of 295.98 points at 1,950.76.
The NYSE, American Stock Exchange, over-the-counter market and other exchanges closed two hours early Friday and will do so again Monday and Tuesday to give the system more time to catch up. The stock exchanges are closing at 2 p.m. EST instead of 4 p.m.
NYSE Chairman John J. Phelan Jr. predicted Sunday that the markets would be able to resume normal hours on Wednesday.
Phelan, interviewed on the ABC-TV program ″This Week With David Brinkley,″ also said he expected some calm to return to the market.
″I think the individual investor, as well as the institution investor, is reasonably optimistic ...,″ Phelan said. ″I think ... that they will assess what’s going on, they will look for value, and I think where they see value they will be back into the market.″
But Phelan also voiced concern about the relationship among world’s markets.
″They’re becoming much more volatile, they’re becoming much more sensitive to both domestic and international news, and they’re becoming much more related to each other,″ he said. ″I think that’s a good thing but also something of great concern.″
Phelan noted that the stock market’s drop ″occurred when the economy is very good.″
″We have to take a look at the patient and talk about what caused it, and get at some of the root causes of - or at least the perceived root causes of what has to be done,″ he said.
Many economists and market watchers put some of the blame for the turmoil on the federal budget deficit, which forces interest rates up and also erodes confidence in the economy.
President Reagan scheduled talks on the budget with congressional leaders Monday morning, but Democratic and Republican representatives sparred Sunday over who was to blame for the lack of agreement on budget cuts.
Beryl Sprinkel, chairman of Reagan’s council of economic advisers, charged on ABC’s ″This Week With David Brinkley″ that Wall Street’s gyrations were due in part to ″the inability of Congress to come up with an appropriate budget″ and its flat rejection of Reagan’s budget proposals over the past seven years.
Rep. Dan Rostenkowski, D-Ill., chairman of the Ways and Means committee, complained on the same program that Reagan has failed to take a leadership role and make clear what his plans are for cutting the deficit, including any move on a possible tax increase.
Sen. Lawton Chiles, D-Fla, the chairman of the Senate Budget Committee, said on CBS-TV’s ″Face The Nation″ that if the talks do not come up with at least $23 billion in cuts called for under the Gramm-Rudman budget law, it would signal ″a failure of leadership″ and that could lead to another unsettled round in the markets and major problems with the economy.