Thursday, May 7, 2009

Global Financial Markets- record falls in 2008

Signs of a new era:

December 31, 2008

Britain's FTSE 100, had its worst year on record, down 31.3%; with similar falls in Paris and Frankfurt.

Shanghai was one of the worst-hit major markets, ending the year 65% lower, which was also a record loss.

In New York, the Dow Jones has lost almost 34% of its value in 2008, its worst year since 1931.
Justin Urquhart Stewart, at Seven Investment Management, said:

The year saw the credit crisis, push several major economies into recession, with banks particularly badly hit - many requiring government bail-outs.

At the close in London, the FTSE 100 index, for the year as a whole the index lost 31.3% of its value, the worst loss in its 24-year history.

'Domino effect'
New York - down 33.84%
London - down 31.3%
Paris - down 42.7%
Frankfurt - down 40.4%
Mumbai - down 51.9%
Singapore - down 49.2%
Sydney - down 41.3%
Hong Kong - down 48.3%
Shanghai - down 65.2%
Tokyo - down 42.1%

There were similar losses in Frankfurt and in Paris.
In Frankfurt, the Dax-30 ended 2008 down 40%, which was the index's second-worst annual performance in its 20-year history. The index had risen 22% in 2007.

Technology firm Infineon, was the Dax's biggest loser in 2008, down 88.1%; followed by Commerzbank, down 74.7%.

"I believe, that we will have a lot of problems next year, and much deeper prices than this year. But where we will be at the end of the year, I have absolutely no clue," said Dirk Mueller of MWB Fairtrading.

Shanghai's fall, wiped nearly $3 trillion (£2.1 trillion) off share values. Shanghai soared more than 300% in 2006 and 2007.

Japanese shares also suffered their biggest yearly decline, with the Nikkei dropping 42%, as world's second-largest economy slid into recession.

As a meltdown of the US housing market, led to a global slump in consumer spending, and industrial production. Foreign firms withdrew investments from Asia, to repay debts back home.
In many cases, markets that had benefited most during the previous bull-run, were the worst affected as it ended.

As demand in overseas markets slowed, Asia's export-driven economies, were hard hit.

In Hong Kong, which is in recession, the Hang Seng index closed the year 48% lower. This was its second-biggest drop to date; and its worst since the global oil shock of the early 1970s.

India's main index in bombay, has more than halved.
"It was ferocious, it was an unprecedented move down. The domino effect was so quick and so swift," said Lucinda Chan of Macquarie Securities in Sydney.
'Many uncertainties'
A surging yen, added to the woes of Japan's biggest exporters such as Toyota and Sony; while political upheaval hit Thailand's market.

"No one saw an end to the bull run," said Kirby Daley, at Newedge Group in Hong Kong.

"What many failed to see; was an end, to the leveraged world we were living in; and an end, to the consumption-driven economy, that the world had become."