- 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.
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- 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.
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- 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.
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- 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. -
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- "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."
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- 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.
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- 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.
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- 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.
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- 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.
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- The three-year downturn has slashed pension fund values
for most individuals.
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- 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.
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- 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.
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- 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.
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- Additional reporting by Chris Flood
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- http://news.ft.com/servlet/ContentServer?pagename=FT.com/
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