'Don't panic' over stock market crash

DON’T panic! That was the advice to investors from Kent financial experts in the wake of yesterday’s stock market crash.

In the biggest fall since 9/11 in 2001, the FTSE 100 saw 5.5 per cent of its value wiped out - £77 billion - in a day of turbulence triggered by fears of global recession, especially in the United States which has been badly hit by the crisis in sub-prime mortgage lending.

Shares plunged around the world, although the full extent of the plunge in the US will not be known until trading opens later today after Wall Street was shut for Martin Luther King Day yesterday. (21)

The UK economy appears to be faring better than the US, although it has its own problems, notably the near-collapse of Northern Rock and a downturn in consumer spending.

Despite fears of a prolonged global financial crisis, local experts claimed the impact of so-called Black Monday would be short-term.

They said it would almost certainly bring a further interest rate cut by the Bank of England next month. (

Their advice to investors was “sit tight.”

It was the wrong time to sell shares and only the brave would buy shares in the present climate, even though there would be bargains for investors canny enough to pick the right ones.

John Morton, chief executive of the Syndicate that own Ashcourt, the wealth management company based at Kings Hill, West Malling, said his company had taken investment out of commercial property which had proved correct. “The advice is hold tight. If we go nine to 12 months down the road, we will say “Panic, what Panic?” Equity investment is still the best way to generate wealth over the long term.”

Mike Sargeant, managing director of Pharon Independent Financial Advisers in Harbledown, Canterbury, said Asian economies were worried about the impact of a US recession and a downturn in consumer spending.

“And that really is spreading around the world,” he said. “It is true that when America sneezes the rest of the world catches a cold because it is the world’s largest economy and therefore any slowdown is bound to have an impact on the global economy.

“Add that concern to the credit crunch and sub-prime lending in the US and you already have investors who are very nervous. The whole thing amounts to one huge loss of confidence. If you didn’t see this coming, then my advice would be to sit tight.”

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