IBM's bargain buy-back sparks repurchasing

IBM took advantage of the share price dive on the stock exchange last week by launching a $3.5 billion buy-back campaign, renewing investor confidence in IT stocks.

The announcement by IBM that it would purchase back the now bargain shares helped spur the Dow Jones Industrial Average up 107.56 to 7268.71, and then on to an unofficial high of 7498.32, its biggest ever single-day point rise. However, the manufacturer tried to sever any connection between its actions and the drop in US share prices, claiming the decision was the result of a scheduled board meeting.

The Nasdaq, in turn, benefited from a jump of 22.16 points to 1557.25.

Following the crash in the Far East, the Dow Jones had lost 554.26 points on 27 October, rising to gain as much as 337 points the following day.

Nasdaq had lost up to 60 points regaining 65.25 points to 1600.34 by 28 October.

On the New York Stock Exchange, IBM's shares rose $6.50 to $96.50. Compaq stock regained $5, or just over eight per cent, to $65.50, claiming the title of the most active share issue. IBM's move sparked mass repurchasing of shares over the next two days, with hi-tech companies setting the trend.

The buy-back fever even seemed to spread back to Asia, the original source of the market turmoil, where the Hong Kong Stock Exchange announced on 3 November that up to 28 companies repurchased shares last week.