Stock Tumble Drives 43 Benchmarks Into Bear Market

(Bloomberg) -- More than 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 recent highs. Declines today turned Greece, India, Indonesia, the Philippines, Saudi Arabia, Slovenia, South Korea, Taiwan and Thailand into bear markets as well.

U.S. stocks tumbled for a fifth day, the longest stretch of declines in 11 months, after the Federal Reserve's emergency interest-rate cut failed to persuade investors the economy will avert a recession.

UBS AG and Bank of China Ltd. led financial companies lower since October 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.

``I'm struggling to find a catalyst that will turn this market around,'' Bob Parker, who helps oversee more than $600 billion at Credit Suisse Asset Management in London, said in a Bloomberg Television interview. ``What we need is evidence that the write-offs in the financial-services sector are behind us, and we are probably only going to get that in the second quarter. Clearly the market situation is fairly ugly at the moment.''

Sept. 11

Europe's Dow Jones Stoxx 600 Index slumped the most since the Sept. 11 terrorist attacks yesterday, sending it into a bear market, commonly defined as a drop of more than 20 percent in a 12-month period. Japan's Nikkei 225 Stock Average tumbled 5.7 percent today, completing its worst two-day drop in 17 years.

The MSCI World Index of 23 developed markets is down 18 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 16 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.

Bear Markets

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, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Italy, Latvia, Lithuania, Luxembourg, Mexico, Namibia, the Netherlands, Norway, Peru, the Philippines, Poland, Portugal, Romania, Saudi Arabia, Singapore, Slovenia, Spain, South Korea, Sweden, Switzerland, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and Vietnam have also dropped at least 20 percent from recent highs.

The S&P 500 has fallen 11.2 percent so far this year, while declines in the U.K. and Germany yesterday left those countries' benchmark indexes down 12 percent and 16 percent respectively.

``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.''

The slump has made stocks cheap by historical standards. The 1,953-member MSCI World is now valued at 14 times its companies' profits, the lowest since at least 1995, according to data compiled by Bloomberg. Europe's Stoxx 600 has a price-to-earnings ratio of 10.9, the smallest since at least 2002.

 

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