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Thursday, 30 December, 1999, 10:56 GMT
Stockmarkets: A crash to come?
American shares have fuelled a global surge in 1999
The past year has been lucrative for many shareholders
By BBC News Online's Alex Hunt

Stockmarkets across the world have finished 1999 at levels few thought possible 12 months ago.

Part of the reason has been the vast numbers of people who have started to buy and sell their own shares.

Stock market rises in 1999 (to 18 Dec)
Malaysia - 90%
Singapore - 82%
Nasdaq - 80%
S Korea - 69%
Indonesia - 60%
Hong Kong - 59%
Sweden - 57%
Japan - 50%
France - 40%
Germany - 27%
Holland - 21%
UK - 17.8%
Spain - 16%
Dow Jones - 15.6%
Italy 13%

Many have begun dealing online and, as converts to the internet, have concentrated heavily on any technology-related businesses.

Tales of soaring share holdings have begun to dominate dinner party chit chat, whether chez Barbra Streisand or in any of thousands of Victorian homes in London whose own surging values would previously have been the conversational obsession.

And no wonder. House prices may have rocketed 30% or so in most parts of London, but even greater fortunes have been made this year by lucky stock pickers.

The percentage increases in leading share values have varied upwards from about 20% on New York's Stock Exchange, to 50% or more in France, Hong Kong, Japan, Sweden, Malaysia, Singapore and Indonesia.

The combined value for the world's leading stockmarkets is 21% higher at the end of 1999 than at its beginning. That compares with an average 5.9% annual return from shares during the 20th Century.

But those healthy returns have appeared positively pedestrian alongside the soaraway - and in many cases inexplicable - values which have been placed on internet related companies.

The multiplying internet flotation may have been an American phenomenon at the start of 1999, but by now the rest of the world has caught the fever.


Our official forecast is for a 25% fall

Peter Oppenheimer, HSBC

London's final few days of trading before the end of the year saw JellyWorks, which invests in internet companies, rise 2,500% after its shares were floated at a value of 5p.

Then there was the case of online auctioneer, QXL, which had been one of the relative internet flops of the year after its summer float.

That had all changed by the end of the year though, as its shares surged ahead from 208.5p on 1 November, to reach 1,667.5 on 22 December.

Freeserve beats BA

Then there was Freeserve, the UK's largest internet service provider, which floated in the summer with shares priced at 150p.

Its performance remained sluggish for months, entering November at 148p. But those who were patient have since been well rewarded as its shares soared to as high as 576p by 22 December.


As long as I see the rotation, I'm going to stay bullish

Ralph Acampora, Prudential Securities

The 5.4bn value of Freeserve, which brought the subscription-free internet service to the UK in 1998, now exceeds that of British Airways.

What makes many internet company valuations baffling for seasoned observers is that many have yet to make a profit, and show little sign of ever doing so.

In America and elsewhere the vast rises in internet related stocks has been well-chronicled.

With the internet accelerating everything it touches there has been time for a number of "crashes" in tech stocks during the course of the year.

But they appeared to be largely blips during a year which has ended with the Nasdaq market, on which many are listed, breaking record after record.

It is finishing the year more than 80% higher than on 1 January - and almost a third higher in the last two months.

'Crash will come in US'

These sorts of rises have persuaded more and more people to begin buying and selling shares from the comfort of their own home, online or by phone.

In the UK in September private investors were making about 45,000 trades a day - by Monday 6 December that number had grown to 125,000 trades.

Similar rises in the number of "amateur" traders have been reported in countries ranging from the US to South Korea.

Many educated observers are predicting more strong growth in share prices to come in the New Year, and there are millions who will be hoping they are right.

But some others have likened the current share mania with the prelude to the Wall Street crash of 1929, which, famously, Joe Kennedy decided was about to happen when he received share tips from bellboys.

The experts are divided on whether there is a crash to come.

Wall Street guru Ralph Acampora, chief strategist for Prudential Securities, predicts the Dow Jones rising towards 14,000 and the Nasdaq to 5,000 in the coming 12 months.

He told the BBC: "I'm a technical analyst, and by definition I'm an individual who follows trends, follows momentum, follows leadership. A lot of the leadership in 1999 is going to continue until the early part of 2000.

"The year 2000 is a presidential election year - the Dow usually has a good ending in a presidential election year - and I see a lot of rotation: that's the lifeline of a bull market. As long as I see the rotation, I'm going to say bullish."

By contrast, HSBC's chief investment strategist, Peter Oppenheimer, is forecasting what amounts to a crash in American stock values in the first half of 2000.

He told BBC News Online: "It's been a strong year, but it has been fairly volatile, with weakness from July to October when there was a 15% fall from its highs.

"But we are less positive about the year ahead. We are looking for markets to fall in the first half of the year. Our official forecast is for a 25% fall."

The picture for Europe and Japan is less bad, said Mr Oppenheimer, saying they would rebound strongly in the second half of 2000 from their falls.

As always, it is up to every investor to choose their own adviser or their own stock.

There might be a crash to come, but there is also the chance to buy early into whatever may be the next Microsoft, or in the UK the next Sage, whose shares were the top performers during the 1990s, rising a meagre 28,000%.

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See also:

30 Dec 99 | Business
Stocks '99: A graph gallery
22 Dec 99 | Business
Shares: the century's best punt
30 Dec 99 | Business
World shares surge
04 Jun 99 | Your Money
Streisand makes a killing on shares
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