Credit crunch hits global shares

By Jamie Robertson
BBC World business presenter

Nokia has had a strong year but its outlook is not so assured

With a credit crunch still stalking the corridors of the world's banks, it's hardly surprising they were the big losers on the BBC's Global 30 last year.

Citigroup (down 47.3% over 12 months) and HSBC (down 7.3%) can hardly have been expected to have had a good year.

The chief executives of Citigroup and Merrill Lynch were forced out of their jobs, and several big banks have had to go cap in hand to China, Singapore and Abu Dhabi for capital injections.

But Mitsubishi's fate (down 25.9%) in Japan is more unexpected after its early protestations that its sub-prime mortgage related losses were minimal.

Worst performing Global 30 stocks Citigroup -47.30% Mitsubishi UFJ Financial -25.94% Tokyo Elec Power -21.94% Toyota Motor -21.10% Takeda Pharmaceutical -16.38% Check BBC Global 30 share price

Whatever economists may claim about the prospect of Asia decoupling from the US and European markets, the pull of globalisation is strong, and the sub-prime virus has been breeding in the globalisation incubator.

This last month Mitsubishi said its sub-prime related losses for the full year may total 170 billion yen, about $1.5 bn.

But Mitsubishi's woes go beyond those of the US housing market and lie in the deep disappointment that surrounds the Japanese economy.

Japanese fallers

Of the six biggest fallers this year on the Global 30, five are Japanese.

It's worth looking at the broader indices too: the Nikkei 225 was the worst performing of all the Asian markets and the worst performing major market anywhere.

The recovery that so many believed was well under way, fizzled out over the summer.

Even Toyota (down 21.1%) and Canon (down 13.5%) fell as investors worried about their ability to keep exports booming in the face of a possible US recession and a possible fall in the US dollar against the yen (neither of which has in fact happened - yet).

East Japan Railway managed a small gain of 16%.

It has a large and constant revenue from its huge real estate, travel, and restaurant businesses, and thus has all the characteristics of a sound defensive stock, a safe haven in uncertain times.

China gains

For good returns one only had to look over the water to China, where China Mobile rose a staggering 92.5%.

But even here the future does not look that encouraging and the gravy train has slowed.

The stock hit a high at the end of October, and has since come off 13%, largely in the light of the government's professed desire to have more competition in the domestic market.

Japanese shares have had a rocky year

The giant Chinese oil production company CNOOC (up 74%) followed the same pattern, falling back in the last two months as investors grew wary of its expansion plans.

In fact, while there are signs among Asia's biggest companies that the shine may be coming off their booming economies, several US names have shown themselves to be very resilient.

The three best performers in the US were Exelon, the country's biggest energy group (up 30.7%), AT&T (now successfully merged with Bell South, and up 17.3%), and Exxon, up 16.7% on the back of an oil price that has in the last few months come within a whisker of $100 dollars a barrel. US crude touched $100 a barrel on Wednesday.

Commodity boost?

However high oil, copper, gold, zinc and nickel rise, being in commodities (like BHP Billiton, up 66.1%) does not guarantee a good share performance.

Best performing Global 30 stocks Electricite de France (EdF) 62.10% BHP Billiton Ltd 66.13% CNOOC (Red Chip) 74.02% Nokia 76.99% China Mobile (Red Chip) 92.53%

BP, still cursed by its polluting of its Prudhoe Bay site in Alaska, humiliated by the resignation of Lord Browne, and chased now in court by victims of the 2005 Texas refinery blast, gained just 5%.

2007 was the year in which Nokia (up 76.99%) finally pulled itself together and re-established itself as the dominant player in the mobile phone market, with about 38% of the market in unit sales, leaving its closest competitors Samsung and Motorola trailing in its wake.

But the future is not quite so assured.

It has warned of tough times ahead as the average price of phones fall and margins get squeezed, especially in China, India and Eastern Europe.

Eire despair?

But 2007 was also the year that Ireland, the Celtic tiger finally lost its roar.

It's been a good run, but finally an overstretched property market, higher interest rates and a strong Euro finally did for the boom.

Whatever the financial outlook, we will always eat chocolate

Instead if you want to see success stories, you should turn to the emerging markets of Ukraine (up 135%) and Slovenia (up 78%), or to Africa where all the major markets recorded sizeable gains.

But for those who are still nervous of emerging markets, and fear that perhaps the West is about to sink into an American-led recession, they should turn for comfort to Nestle, the sixth- best performer on the BBC's Global 30.

Food prices are rising around the world, which has allowed it to raise prices to retailers and keep its margins strong.

Above all, the 30.9% annual increase in its share price seems to suggest that however grim 2007, or perhaps even 2008, may appear, we will always want to eat chocolate.