Closing Market Report
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Half of world’s indexes in bear-market territory
Bloomberg News
LONDON » Almost half of the world's biggest stock indexes fell into a bear market as mounting concern about a U.S. recession dragged down banking and retail shares across Asia, Europe and Latin America.
The MSCI World Index's 3 percent decline yesterday, the steepest since 2002, left benchmarks in France, Mexico, Italy and 35 other countries at least 20 percent below their highs in the last year. The Standard & Poor's 500 Index may post its biggest decline since 2001 when the U.S. market resumes trading today after the Martin Luther King Day holiday, futures showed.
UBS AG and Bank of China Ltd. led financial companies lower after banks lost more than $100 billion on credit investments. Bang & Olufsen A/S and Wal-Mart de Mexico SAB were among consumer stocks that tumbled amid signs the world's biggest economy is shrinking. Even with MSCI World valuations at the cheapest since at least 1995, some of the biggest investors say stocks may fall further.
Europe's Dow Jones Stoxx 600 Index yesterday tumbled the most since the Sept. 11 terrorist attacks, sending it into a bear market, commonly defined as a drop of more than 20 percent in a 12-month period. Hong Kong's Hang Seng Index slumped the most in six years.
The MSCI World Index of 23 developed markets is down 17 percent from its Oct. 31 record. The MSCI gauge of developing nations also reached a bear market yesterday. Declines in Lima- based Cia. Minera Milpo SA and Tainan, Taiwan-based Catcher Technology Co. led this year's 14 percent retreat.
Japan became the first of the world's 10 biggest stock markets in November to enter a bear market since the summer's U.S. subprime mortgage collapse. China followed later that month before the benchmark CSI 300 Index recovered and rose 162 percent for the year.
Among 80 equity national equity benchmarks tracked by Bloomberg, indexes in Argentina, Australia, Austria, Belgium, Bulgaria, Chile, Colombia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Hong Kong, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Mexico, Namibia, the Netherlands, Norway, Peru, Poland, Portugal, Romania, Singapore, Spain, Sweden, Switzerland, Sri Lanka, Turkey, Venezuela and Vietnam also have dropped at least 20 percent from recent highs.
The S&P 500 had fallen 9.8 percent this year through Friday, while declines in the U.K. and Germany yesterday left those countries' benchmark indexes down 14 percent and 16 percent respectively. Futures on the S&P 500, the benchmark for American equities, dropped 4.5 percent yesterday.
"We've seen panic selling," said Matthias Jasper, head of equities at WGZ Bank in Dusseldorf, Germany. "Particularly small investors lost their nerve. These people are selling with conviction."