Stock exchanges in 2022
Global stock exchanges and bond markets have lost more than $30 trillion in 2022, the most since the global financial crisis of 2008. This was reported by the British Financial Times on Friday evening.
According to the newspaper, high inflation in many Western countries, rising interest rates and the impact of the conflict in Ukraine were the main reasons for the losses. The newspaper noted that the broad MSCI All-World index of developed and emerging market equities has lost a fifth of its value this year, the biggest fall since 2008.
Bond markets have also suffered from heavy selling, with the yield on 10-year US Treasuries, a global measure of long-term borrowing costs, rising to 3.9% from around 1.5% at the end of last year the biggest annual rise in Bloomberg records going back to the 1960s.
The market value of companies traded on all global exchanges collapsed by $25 trillion, according to Bloomberg, while the data provider's Multiverse Index, which tracks global government and corporate debt, fell nearly 16 per cent, or $9.6 trillion, as of Thursday's close, according to preliminary estimates.
One investor described the combined downtrend in stocks and bonds as a "tipping point for investors". This contrasts with 2008, when the downturn was focused on equities while bond prices rose, dealing a painful blow to many investors who build portfolios in the hope that fixed-income assets will act as ballast when stock markets fall.
The losses came after central banks, led by the Federal Reserve, raised borrowing costs in an attempt to control the worst inflation in decades.
These rate hikes abruptly ended the era of easy money following the financial crisis, which pushed government shelter bond yields below zero and pushed up the prices of even the riskiest assets, especially after the Covid-19 pandemic.
At the same time, stocks on the stock exchanges in New York, Shanghai and Frankfurt have fallen significantly. In particular, the S&P 500 index lost almost 20% and the Nasdaq electronic exchange index was down 33%, its worst performance since 2008. The CSI 300 Index on the Shanghai and Shenzhen platforms fell 22% in local currency terms and 28% in dollar terms. MSCI Europe fell 16% in dollar terms and 11% in euro terms.