WORLD stock markets will end 2002 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.
Weak economic growth, corporate scandals, bankruptcies, profit warnings, dividend cuts, asbestos litigation scares, the forced selling of equ
ities, volatility and fears of deflation and conflict in the Middle East have all conspired to unsettle markets.
The declines of 2002 have been spread across the globe with the UK, Japan and, particularly, Germany leaving the year in deeply negative territory.
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, the FTSE 100 index extended a losing streak into eight consecutive sessions, its longest series of falls since its 1984 inception.
Tokyo ends 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.
Combined, the European bourses suffered their worst year since 1974 with a fall of 22.1 per cent in the MSCI Europe index - Germany has been worst hit, with a 35 per cent loss.
Many insurers are already steering away from equities and looking to other investment classes and some analysts now fear a wider fall-out, with market declines overflowing into the wider economy.
The three-year downturn has also slashed pension fund values for most individuals.
"This is a crisis unfolding as badly as the Great Depression," Albert Edwards, head of global asset allocation at Dresdner Kleinwort Wasserstein, told FT.com. "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 - the worst three-year performance since 1929-31.
