http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c
=StoryFT&cid=1039524056225&p=1012571727085
Stock markets down third year in row
By Michael Morgan and Deborah Hargreaves
Financial Times
Published: December 30 2002 21:22 | Last Updated:
December 30 2002 21:22
World stock markets will draw the line on Tuesday under
a third consecutive year of
losses which, taken together, represent the most severe
bear market since the Great
Depression more than 70 years ago.
The MSCI World total return index has lost 20 per cent
in 2002, its worst yearly
performance since 1974. In the early 1970s crash, the
Dow marked the most severe
falls. The declines of 2002 have been spread across the
globe with UK, Japan and,
particularly, Germany leaving the year in deeply
negative territory.
This year's falls would deliver another blow to the
equity culture, said Robert Buckland
at Schroder Salomon Smith Barney. "Only the most
experienced investors and
brokers will remember a time when losses have been as
severe as they have been
this year, " he added.
Many insurers are already steering away from equities
and looking to other
investment classes. Some analysts now fear a wider
fall-out, with market declines
overflowing into the wider economy. -
"This is a crisis unfolding as badly as the Great
Depression," said Albert Edwards,
head of global asset allocation at Dresdner Kleinwort
Wasserstein. "The economy
doesn't feel like it yet but, in a year or so, it may
do."
Cumulative losses for the FTSE World index since the
start of 2000, after the bursting
of the technology, media and telecoms bubble, total 43
per cent.
That was the worst three-year performance since 1929-31
when world markets fell
58.8 per cent, according to indicative indices
calculated by researchers at London
Business School. By comparison, world markets lost 39
per cent in 1973 and 1974 at
the height of the world oil shock.
Weak economic growth, corporate scandals, bankruptcies,
profit warnings, dividend
cuts, asbestos litigation scares, the forced selling of
equities, volatility and fears of
deflation and conflict in the Middle East have all
conspired to spook markets.
While the downturn in world markets has prompted one of
the most dramatic
liberalisations in monetary policy since the second
world war, some equity market
strategists believe further action is needed before many
institutional investors are
tempted back to buying shares.
The three-year downturn has slashed pension fund values
for most individuals.
On Wall Street, the Dow has fallen 17 per cent, its
worst performance for 28 years.
The technology weighted Nasdaq composite has done even
worse with a fall of 22
per cent. London is down 25 per cent. This month,
London's FTSE 100 index
extended a losing streak into eight consecutive
sessions, its longest sequence of
falls since its inception in 1984.
Tokyo rings out 2002 with a 19 per cent decline in the
Nikkei 225 average. The market
sank to a 19-year low in mid-November and suffered the
ignominy of losses over nine
consecutive trading days earlier this month, its longest
losing streak for 11 years.
The European bourses suffered their worst year since
1974 with a fall of 22.1 per cent
in the MSCI Europe index. Germany has lost almost 35 per
cent as hopes for a
recovery were frustrated.
_______________________________________________
Futurework mailing list
[EMAIL PROTECTED]
http://scribe.uwaterloo.ca/mailman/listinfo/futurework
