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By Simon Senior
simon.senior@jpmorgan.com
AS OF OCTOBER 2011
European Indices (U.K., France, Germany, Switzerland)
All quotes in Euros
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Commentary
MSCI Europe was down 7.5% from the end of July to October. All markets have been adversely affected by the destabilizing impact of the uncertainties caused by the fiscal and sovereign debt situation. Volatility has remained high as possible solutions (both political and economic) are publicized and discussed. The euro area economy has seen large declines in both output and new orders.
Asian Indices
All quotes in Euros
 ASK
Commentary
- Falling confidence in global growth prospects and signs that tighter Chinese policies are imposing the desired impact have eased Australian markets lower over the period. Uncertainty over results of decisions made in Europe continue to provide volatility. The market was down 3.4% in EUR terms since the end of July.
- From August 1 to the end of October, MSCI China dropped 14%, underperforming the MSCI Emerging Markets by 6.9%. All sectors reported loss. A strong rebound was experienced in October, but did not counter losses in August and September.
- The Hang Seng Index has fallen 8.4% in EUR terms since the end of July. The Chinese Government’s monetary easing (to promote growth), along with U.S. data suggesting reduced fears of a recession have improved sentiment, but did little to counterbalance the impact of events in Europe.
- In common with other Asian economies, escalating Euro-area stress, increasing risk of U.S. recesson and growing fear of inflation has driven the Singapore market. In EUR terms, the Straits Times index has dropped over 11% during the past three months.
- A degree of political instability (leading to resignation of the Japanese Prime Minister) along with a downgrade by Moody’s of Japan Government rating pushed Japanese markets lower in August. Subsequent months produced no significant change, leading to a 3 month fall by the Topix in EUR terms of 6.6%.
- South Korean KOSPI continues to be driven by concerns over the European Sovereign Debt crisis as well as global recession woes. Losses in August and September were not fully regained in October, although hopes of progress on a resolution in Europe increased. Despite the recent rebound, sentiment and trading volumes in the equity market remain low, with ongoing concerns over the global economy. The market fell by 12.5% in EUR terms.
Source: J.P. Morgan's Investment Analytics & Consulting Group, J.P. Morgan Equity Research, Morgan Markets, Bloomberg, Rimes
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