Monday, October 27, 2008

Market bloodbath: When will it end?

Just when you think world stock markets can't go any lower ...

Another Monday, another stock-market massacre. This time the Jakarta Index was down 6.3% - and that was relatively strong showing for Asia, since Thailand's index lost 10% and the Philippines more than 12%. Hard to know who's dragging down who, but in the U.S., it's looking like hedge-fund redemptions are one catalyst for this ongoing slide. Investors want their money out, which requires hedge funds to raise capital, which requires them to get rid of stocks at rock-bottom prices whether they like it or not.

As such, the markets have become untethered from the fundamentals, and are simply another victim of the global deleveraging process, in which cash is king. For those with strong stomachs, the good news is that legendary market bears like Jeremy Grantham, of Boston money manager GMO, are sounding like kids in a candy store. Global equities are the cheapest they've been in 20 years, he calculates. But as for emerging markets? In the short term they could fall another 20%, as the bear continues to rampage.

Today's Top Stories

No comments: