Sunil Jain: Life's not fair

PERSPECTIVES

If you’re looking for evidence that the world’s not a fair place, the stock markets are a great place to look at. Everyone knows sub-prime lending in the US and the complicated alphabet soup of financial derivatives are responsible for the global financial crisis. Yet, US stock markets appear to have come off better than most. According to data put out by Standard & Poor’s, 52 equity markets across the world lost a total of $5.8 trillion in October, a figure that’s 45 per cent greater than that in September when the loss was around $4 trillion — through the year, investors in these markets lost $16.2 trillion. What’s really galling though is that the US market lost just 34 per cent on a year-to-date basis and 18 per cent in October — by contrast, India lost 65 and 29 per cent, respectively, Russia 66 and 35 per cent, China 59 and 23 per cent, South Korea 56 and 27 per cent, Hong Kong 55 and 23 per cent, respectively, and so on. As always, the credit raters have a reason for it and the explanation given by Howard Silverblatt, Senior Index Analyst at S&P, is that the much higher expectations of growth in non-US countries and the expected decoupling caused these markets to soar — when it became clear they weren’t decoupling in a hurry, they fell more.