Sharemarket crash blame on Govt grotesque—Palmer
Both Mr Palmer and the chairman of the Securities Commission, Mr Colin Patterson, skirted round questions about the relationship between the recommendations and the October sharemarket crash. Mr Palmer said it was grotesque to suggest the Government should be blamed for the sharemarket crash by not moving against insider trading sooner. "The fact that the 1982 recommendations were not implemented did not lead to the crash,” he said. "The sharemarket is a place where prices go up and down and the Government cannot legislate to change that.” New Zealand looked set to become a regional, if not an international, financial centre. These recommendations would enhance the reputation New Zealand already had. “But I must emphasise that they will not stop the sharemarket being a risktaking place," he said, “and people who are
averse to taking risks should not be in it.” Recent events on the sharemarket indicated that changes were needed. This report on insider trading was timely and the Government would act on it quite rapidly, although it was not a matter free from difficulty. Mr Patterson said the recommendations had profound implications for the New Zealand economy and its place internationally. While the overseas sharemakets had fallen in value by about 25 per cent in the crash, New Zealand shares had fallen 59 per cent. “I believe there has been a massive loss of confidence in our financial traders, and we have quite a number of such operators,” he said. Because of the interlocking nature of many financial dealings there was a snowball effect after a crash from which those operators with stronger asset bases were more cushioned. Where
there were real assets the downward movement was not as extreme. Mr Palmer said the 1982 report of the Securities Commission should, with hindsight, have been adopted and the commission was now recommending the Government pick it up. Mr Patterson conceded that perhaps the 1982 report had been a bit radical for the market of the day. Its recommendations had been highly controversial then and had been criticised strongly by the then Government’s advisers. He did not agree with those who asserted that the New Zealand sharemarket’s reputation had been damaged by insider trading and the crash. So it followed, he said, that the recommendations were not too late. There were seven new main financial entities coming to New Zealand — that showed confidence in the New Zealand economy and sharemarket had not been diminished.
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Press, 28 December 1987, Page 3
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411Sharemarket crash blame on Govt grotesque—Palmer Press, 28 December 1987, Page 3
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