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Friday, 15 December, 2000, 16:27 GMT
Tech stock meltdown
A round-up of the year on the world's stock markets, which had a roller coaster ride this year, as reported by the BBC's correspondents in New York, Frankfurt, Singapore, and London.
US market turmoil
by Patrick O'Connell in New York
"I can't remember if I cried ... the day the Nasdaq died."
It was back in March that the e-mail arrived. Like many others I'd received the stock market parody of "American Pie." Out went Don McLean's famous lines -- a eulogy to music giants. In came tech-wreck lyrics harking back to the halcyon days of the bull market.
In truth .. that white knuckle slide in March which inspired "Humble Pie" -- the lyrical send-up -- was little compared to what's happened since April.
Nasdaq's ups - and downs
The year's graph for the Nasdaq resembles an awesome mountain range. The ascent and descent made during the first three months of the new millennium appear as a Matterhorn of the markets.
Investors who could not believe how the market doubled between August of 1999 and March of 2000 couldn't believe it either when it had then halved by the end of November.
The tech stocks, and their barometer the Nasdaq index, are THE story in global markets over the past twelve months.
Bloated on risk, this was the year when investors got stomach ache and blamed it on eating too many rich stocks.
With every sign of a slowing economy and every profit warning towards the end of the year came more selling.
Interest rates at a nine year high in the US made the high-valued internet, computer, or telecom share look exposed even if there was to be no big slow-down.
By comparison, the story for the Dow Jones industrial average has been much more serene.
There's a bear market among tech stocks but not among traditional blue chips. This seems to show that there is still money looking for a home.
Fears for the future
What will Americans do as the tax year ends?
Make no mistake - there are hundreds of billions of dollars out there right now which could head back into stocks, and there remainsa broad faith in the market.
But there is for the first time in years public mention of the "R" word.
It's the economic equivalent of the dark family secret.
Once more the name of the peculiar relative called Recession is heard around the Christmas table. The hair prickles on the back of the neck: can it really be true? Recession is alive? Not locked up in a home?
The US economy in 2000 will probably muster an annual rate of 2.4 % growth.
Let's not forget, the world needed the US economy to slow gently- but the world also needs it not to skid off the runway.
If there is no recession, the believers will be back buying stocks.
In that case timing this market right will make some people very wealthy again.
This picture also requires the US Federal Reserve to cut interest rates with the skill of a pilot in a storm, gliding the economy safely on its way.
If the fear persists that there WILL be negative growth then certain stocks including technology issues are again vulnerable.
If it ever actually arrives, then that will impact on other share sectors too. Welcome to the year 2001. Welcome to the chalice picked up by the incoming Bush administration.
The market which exaggerates greed also exaggerates fear. How did we ever forget ?
Europe Market Report
by Patrick Bartlett from Frankfurt
The year of the Milennium will be remembered in Germany for tumbling telecoms shares and car companies having trouble abroad.
But the year began with a very different story. Mannesmann, the engineering to mobile phones group, was swallowed up by Britain's Vodafone. It was the first successful hostile takeover in German history, and, seen by many as a turning point in Germany's business culture.
The rise of shareholder power was perhaps felt most strongly at the German carmaker, BMW. After five years of losses at its British subsidiary Rover, it finally yielded to a growing investor revolt, and sold the UK company for the symbolic price of one pound.
BMW's experience has probably been haunting Juergen Schrempp, boss of the German-based Daimler Chrysler. The maker of Mercedes cars is being sued in America for allegedly misrepresenting its merger two years ago with Chrysler. The action follows the collapse in Daimler Chrysler's share price, following big losses at its US operations. Mr Schrempp, who's replaced almost the entire management team at Chrysler, is now fighting to keep his own job.
Falling shares have also been the bain of Germany's technology stock exchange the Neuer Markt. About half of the companies launched this year have seen their shares fall below their offer price. One of the biggest casualties has been the German media company EMTV which had to be bailed out by the Kirch Group in December.
But it's Telecoms companies which have caused the biggest shareholder angst. T-Online, the internet service provider, has plunged since its huge share issue in the Spring, leaving millions of ordinary shareholders disappionted. Its parent, Deutsche Telecom, fared no better when it floated shares in its third public issue since the start of its privatisation in 1996.
Deutsche Telecom's stock market slide could have serious repercussions for its $50 billion bid to buy Voicestream, the American mobile phone company which is the key to the German firm's trans-Atlantic strategy. If its shares fall below $28, the cash and stock offer for Voicestream could collapse.
Asia Market Report
by Neil Heathcote from Singapore
One year ago, stock markets around the world were booming. America's economy showed no sign of flagging.
A new generation of entrepreneurs surfed a tidal wave of venture capital as they built the brave new economy out of bright ideas and enthusiasm. And Asia clambered aboard the bandwagon.
That bubble of technology-fuelled optimism burst early in the year.
And as it became clear that the US economy was also slowing, Asia followed America back down to earth.
The difference - while New York's stock markets have ended not too far adrift from where they started, Asia's fell by more than 20% over the year.
The numbers speak for themselves.
Those who were originally thought best placed to benefit from the booming demand for technology - in particular Korea and Taiwan - saw their markets falling hardest later in the year.
Seoul is currently down more than 40% - and Taipei has fared little better.
And like a bad cold, the so-called 'Asian contagion' of 1997 has refused to go away.
Several countries have failed to impress with their efforts at reform.
A question mark still hangs over Korea; Thailand stumbled after a promising start, while Manila and Jakarta added their contribution to the overall gloom.
Even Tokyo fell, as the slow pace of reform and absence of political will for change took its toll.
So did no one benefit?
Hong Kong suffered the same volatility as much of the rest of the planet - but managed to preserve an even keel over the 12 months.
One market even rose. Dealers in Shanghai have certainly had an exciting ride, but with the special prize of ending nearly 50% up on the year.
London market report
by Declan Curry, Business Presenter, News24
In the financial fairground of share dealing, there was one main attraction for London in the year 2000: the tech stocks roller coaster.
Until March, it was on the soaraway setting, as tech stocks continued to rise on the back of dot com euphoria.
Then came Tech Wreck 2000, and the ride switched into crash mode, hurling tech shares into sharp decline.
By the time the year is out, leading tech stocks (as measured by the Techmark 100) will be almost a third less valuable on average than on New Year's Day 2000.
And it's not just tech shares - all the main stock market indices in London are set to be in the red by the end of the year 2000.
The FTSE 100 index is expected to show that shares in our leading blue chip companies declined by a tenth on average over the year.
The FTSE 250 index of medium sized companies is set to end the year at a small loss; even if an end-of-year rally pushes the index into the black at the last minute, shareholders would still have been much better off putting their money into the building society than investing it a basket in small and medium sized companies.
And investors who thought they could cut their risk by putting their money into tracker funds that follows the entire London market will also be worse off. The FTSE All Share Index is set to end 2000 down in value by one twelfth.
Among the blue chips, the biggest losers of the year include the cable TV company Telewest, down 67% at time of writing; the phone company BT, whose 2 million or so shareholders have seen their investment slump by more than half over the year; and the electronics and engineering company Invensys, also down in value by a half after buying bankrupt Dutch software house Baan.
The big losers among smaller companies were all tech stocks. The Scottish telecoms company Thus shed around four-fifths of its value. The Internet access company Freeserve slumped by a similar percentage before shareholders got their 'get out of jail free' card in the shape of a takeover offer from the French company Wanadoo. The computer company Sema fell by three-quarters, driven down by a severe market scare about its future profits.
The rise and fall in tech stocks lead to some vigorous re-drafting of the main FTSE 100 index.
The premier league of UK companies was shaken up three times this year, but by the year's end, almost all of the telecoms, media and tech stocks that got into the top flight for the first time have dropped straight back out again.
One notable winner is the cheap and cheerful retailer Matalan. The discount store's shares have more than doubled this year, and the company has caused indirectly the biggest drama of the year - the on-going crisis at Marks and Spencer.
Once the elegant grande dame of the High Street, Marks & Sparks saw its shares hit their lowest price in ten years, crashing through the £2 barrier. The shares are now still only around half their price at the start of the year.
And let's not forget that the London Stock Exchange itself was not above a bit of drama. It tried to race up the aisle with the German stock market in Frankfurt, but when the chaplain asked if there was any reason the two should not be joined, a host of London's smaller retail stockbrokers leapt up in church, yelling objections at the top of their voices.
Then the exchange had to fight off amorous advances from a sweet-talking Swedish stunner, the technology group OM. That wedding offer spurned, we're just waiting for the LSE to assume its news name -- Nasdaq London.
Declan Curry reports from the Stock Exchange for BBC Breakfast on News 24 and BBC One each weekday morning at 6.45am, and has regular market updates on News 24 after 9am.
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