2011 cuts $3trn from shareholder wealth

The double-digit fall in global sharemarkets last year lowered the wealth of shareholders by $3trn, with only two markets, in southeast Asia, rising.

Overall sharemarkets lost 10.07%, according to S&P Indices.

S&P Indices’ Howard Silverblatt said years ago January was characterised by traders initiating new positions aided by “strong cash infusions”.

“But things have changed – at least in the last two years. Tape watchers have concerns about inflows, and few expect significant inflows from individuals, whether it is for their own account, or self-direct retirement plans. Profession money managers have also had a difficult time picking winners – be it stocks or countries – and…safety concerns continue to rank high on investment policy.

“The market is expected to continue going nowhere fast, with short-term volatility, and low confidence in projections. Debt issues are expected to become critical – with the potential for another recession due to government pullbacks – and political issues are expected to grow.”

But Silverblatt noted dividends were expected to start growing in the US later this month, and healthy earnings numbers for the fourth quarter – “expected to be the third best on record”.

Such healthy prognoses for the US did not stop its stock markets, now representing 45% of the global wealth vested in shares, falling by 0.82% last year.

Developed markets overall fell by 8.19%.

Emerging markets, tipped by many as ‘growth’ markets at the start of 2011, fell 22.9%.

Some 21 markets in the S&P Broad Market Index lost at least 20% of their value, and only the Philippines and Indonesia rose, by 0.21% and 1.14% respectively.

As investors sought safety elsewhere, yields on 10-year Treasuries dropped 21 basis points to close at 1.88%, less than half the 3.84% they recorded at the end of 2009, and significantly lower than the 3.29% at the end of 2010.

Silverblatt noted 2011 was a ‘bookend’ year, in the sense that stocks rose in the first and final quarter – by 5.42% and 11.15% – but concerns over US and European debt and political instability sent shares down by 0.39% and 14.33% in the second and third quarters.

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