Forum Archive Index - November 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

Friday saw some nice rises and then, after a warning to Australia from the Talibans, a sudden pull back:

 

MIG: This glamour stock started the day @ $3.90, rose to $3.97 ( remember that we talked about $4?), then suddenly fell to $ 3.83 ( -7 cents for the day ).

 

CLI: Started the day @ $3.46, went up 7 cents to $3.53, then suddenly fell back to $ 3.36 ( -7 cents for the day).

 

MIG has roads and some overhead bridges while CLI has Real Estate.

 

I don't know why the share prices should have fallen apart from some panicky investors reading more into it than warranted.

World wide, expect the Governments to pay for any damage caused by terrorists, starting on Jan 1, 2001. Some countries are already doing that.

 

I am looking to a recovery next week now these panicky investors have been shaken out.

 

QBE: Following a recapitalisation, S&P has given this company the same credit rating it had before the WTC attack. The shares rose to $7.56 (+32).

 

As mentioned, terrorist attacks will not be part of a policy ( there are still some remnants before Dec 31, 2001). QBE already has these policies in place and will most likely act for some governments).

 

QBE has reorientated the US risk management.

 

Reinsurance costs are moving up strongly due to less capacity available ( less competition due to more companies disappearing). Hence, insurance costs will move up as well.

 

QBE does both and has a good capacity at Lloyd's. Expect insurance premiums to rise strongly: as mentioned in earlier reports, many insurance and reinsurance companies went bankrupt in 1998-1999.

 

This in turn started a new cycle and the WTC attack has strengthened this cycle and most likely will make it last longer! 

 

Gerry

Holds these stocks