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Wednesday, 13 February 2008 |
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Recent gains wiped out as equity market horror finally hits our global index of ICT stocks.
Despite steady gains through 2005, 2006 and 2007, our Redux Global ICT 100 (R-100) Index may have finally succumbed to the pressures afflicting the world’s equity markets.
A 10.1% fall in January, the largest monthly decline in nearly four years of R-100 calculations, took the index back to levels not seen since April 2007. It effectively wiped out eight months of gains since then.
There are suggestions that the credit crunch is moving closer to the ICT sector. It weathered the initial turmoil last summer when the scandals began to emerge and even went on to post three months of advance in the autumn, culminating in a record high of 1529.87 in October. It enters February at 1323.58, or 13.5% off that record level.
The poor performance was spread around the world: EMEA was off 7.6%; Asia-Pacific shed 10.6% of its value; the Americas were down 12%. The resulting decline in the R-100’s value in January was US$500bn. Yikes!
Asia-Pacific had just four companies in advance against 16 fallers; seven out of 40 companies in the Americas posted gains; just three out of 40 EMEA stocks saw rises.
So, what next? If the question marks over credit start to bite, as opposed to January being a mere blip in the context of global financial malaise, the situation may be retrieved. But freefall is an option, too.
Jim Chalmers
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