That's almost a trillion dollars wiped off market capitalization in the past 12 months. As more Asian economies slip into recession, currencies are under pressure, corporate balance sheets are bleeding and foreign and local institutions are looking to sell equities at any excuse. And forget bargain hunting for now. All that at time when Wall Street remains near its peak and European markets keep breaking records. Many financial gurus believe the Dow Jones index will hit 10,000 in early 1999, though there may be tense moments later this year.
Inflation remains low in the U.S. and cheap Asian imports are keeping it that way.
Interest rates have been steady for two years and the Federal Reserve isn't likely to tamper with them in the near future. Alan Brown, chief investing officer at State Street Global Advisers in London, says European markets may fare even better, despite Russia's market turmoil. Abhijit Chakrabortti, strategist for HSBC Securities in Hong Kong, says that cheap isn't necessarily attractive. But there were disappointments on policy, growth and earnings. Moreover, there will be huge equity dilution as part of the recapitalization and restructuring of companies.