Global markets shrug off US default fears; add $1.5 tn wealth post govt shutdown

Mumbai: The world markets shrugged off theUS default fears arising out of the more-than-two-weeks ofgovernment shutdown in October with handsome gains of $1.5trillion in market wealth, or a 3.8 per cent rally, with 44 ofthe 46 markets covered ending the month in the green.

“For October, the markets padded up their Septembergains of 5.27 per cent, with a broad 3.78 per cent gainoverall. While the developed markets added 3.68 per cent,emerging ones added 4.69 per cent, with 44 of the 46 marketsgaining for the month,” senior index analyst at S&P Dow JonesIndices Howard Silverblatt said in a report.

The year-to-date gains for developed markets are animpressive 20.19 per cent, with the ex-US gain being 15.99 percent. The US is up 24.29 percent year-to-date.

On the overall wealth creation, the report said themarket has added $1.5 trillion to the shareholders’ wealthin October taking the overall wealth increase to $6.7trillion year-to-date.

While with an 11.07 percent rally, after a bloodbathof 17 per cent in the previous two months, the Sensex toppedthe emerging markets indices, while the Nikkei of Japan is thesole loser in amongst the developed market indices with aminor 0.04 percent fall for the month, and Columbia being thesole emerging market decliner, losing 0.24 percent,Silverblatt said.He, however, added that India still is 7.33 percentin the red year-to-date.

However, the report notes that uncertainty continuesto remain high globally, but investors appear to want to be inthe market.

While the October rally helped the emerging markets reduce their year-to-date decline to 1.19 per cent, as half the markets remain in the red year-to-date, the developed markets did well in the month adding 3.68 percent, with the ex-US indices adding 3.19 percent. The US posted a 4.13 percent gain in the month post the debt ceiling resolution.

The other emerging market winners include the tension-ridden Egypt adding 9.50 per cent for the month, breaking into a 3.48 per cent gain year-to, while the

developed markets chart is topped by Greece padding up a whopping 15.43 per cent. In fact, Greece leads all the covered 46 markets year-to-date with a staggering 40.72 percent gain, which although from a three-year return perspective is still deeply in the red, off 35.87 per cent compared to the 27.09 per cent global return.

Italy is the other double-digit winner, adding 11.74 per cent, Spain gained 9 per cent. Singapore did relatively poor, adding 0.53 per cent for the month, the report said. The report said, while the quantifiable short-term impact of the shutdown is pegged at $24 billion and a 0.6 percent reduction in the Q4 GDP, the longer-term cost is likely to be measured in increased uncertainty in investment by companies and higher concern by consumers.

PTI