It’s A Blood-bath In The Global Markets

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Global crisis. You call it by any name, tsunami or a storm or even a quake with an intensity of more than 9 on the Richter scale. The devastation in the global financial markets following the crisis in Wall Street in September has totally wrecked the financial backbone of all the leading world markets and it is certainly no less than the natural calamities which struck the mankind in recent times.

Following the disaster in the US financial market, which has seen mammoth banks such as Lehman brothers and Merrill lynch going down the drain, almost all the indices all over the world crumbled and a kind of free fall had started in the markets. The quantum of this fall can be gauged from the fact that in September all the 52 markets fell like a house of cards, be it a developed market or an emerging market, leading to a loss of whooping $4.1 trillion. The Indian market is no exception and it has lost 18.10% in September.

The loss in October seems to be more painful as in the first 3 sessions itself Sensex lost more than 9.25%. Now if  this is the picture till date, every one is quipping what will be in store for the months to come as this financial crisis is far from over and largely termed as the worst since the great depression. The shock of this crisis on the global financial platform is such that in the last quarter ending September the equity markets around the world have lost $ 5.80 trillion, while the yearly loss has touched $ 10.5 trillion. If we compare the performance of the world market with the past, this time it was worse. As far as emerging markets are concerned the situation is graver than the developed markets. According to an analysis by Standard & Poor's in September, emerging markets lost almost 18.76% while the loss in the developed markets was limited to 14.08%. Astonishingly US, which is at the helm of all the crisis, has performed better than the other markets and lost just 9.29% in September.

Developed markets triggered the rot
If we take a look at the performance of developed markets in the 2008, especially September, then, though the rot has started from US, it fared comparatively well and in a way passed its real shocks to other markets. In reference to developed markets Iceland was the worst performer with 39.13% decline in the month of September though it has performed reasonably well in the previous month with [PAGE BREAK]

just 1.57% decline. With this huge decline in September Iceland lost whopping 69.17% in 2008 till September, giving the manifestation of the turmoil enwrapping the global markets. As far as the heavy weights are concerned US markets have lost almost 19.47% in 2008 and out of this 9.29% decline has come only in September. Interesting point in this decline is that though every other market had shown a decline in August and July, the US market was a net gainer with 0.08% and 0.40% appreciation respectively.

On the other hand the European markets literally followed the US and declined unabatedly in September. The UK market has shown a decline of 32.02% in 2008 and September contributing 15.09% in it. On the other hand Germany's index has declined 15.40% in September followed by Italy, which has shown a drop of 15.72%. Asian developed markets were also severely affected by the crisis and reacted in a weary manner led by Japan Nikkei with 11.64% decline followed by Singapore with 15.85% depreciation. These two markets lost almost 23.24% and 33.815 % respectively in 2008 till September. Another developed Asian market, Hong Kong, fared the worst with 18.23% decline in September, showing the intensity of financial shock in which the markets are into.

Emerging markets received the maximum brunt
Though the epicenter of this financial quake was the US and slowly this tsunami is traveling towards Europe, yet it has done maximum devastation in the emerging markets. Experts are of the opinion that this is an aftermath of US crisis and if world economic powerhouse is crippling then the economies dependent on it will certainly face the brunt of it. As far as emerging markets are concerned, they have lost around 18.76% in September. This figure becomes more shocking in the wake of the fact that in the quarter ending September emerging fell by 27.98% and out of this 18.76% came only in September. Though almost all the indices shown a decline in September and quarter, Philippines is the lone crusader in 26 emerging markets with an appreciation of 0.04% in the last quarter. On the other hand in the matter of yearly (to date) performance Jordan showed a jump of 0.96% till September. In this way out of 26 emerging markets 25 markets showed a decline, with Pakistan being the worst performer with 52.18% drop till September in 2008. An interesting part in this is that though our neighbor was severely hit by the crisis in 2008, it has been the best performer in the month of September with just 4.12% decline. This only gives us the idea of uncertainty prevailing in the global arena. Russia was the worst hit with 24.07% decline in September followed by Brazil with 23.42% drop. China was equally affected by this financial tremors with its market shedding around 20.76% during the month, consolidating the yearly (till September) decline to 46.35%. Other major emerging economies like South africa, Egypt and Argentina also faced the impact of financial crisis and shed 15.61%, 17.03% and DS 22.64% respectively.