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What happened to equity markets around the world during the height of the crisis in thefall of 2008?




Question;What happened to equity markets around the world during the height of the crisis in thefall of 2008? Did global markets move in tandem?In October 2007 world equity markets were standing at an all-time high USD marketcapitalization. The total market capitalization of all publicly traded companies in the world wasUS$51.2 trillion in January 2007( thenext 17 months largest destruction of equity value happened. At end of February 2009, globalequity market capitalization was at just over $22 trillion, which is a drop of more than 56% and areduction in equity value of more than $29 trillion. This loss in wealth to equity holders isequivalent in value to about 50% of global GDP for 2007. ( 2008Crisis was not only banking crisis, it was global financial market crisis. Equity levels weredriven down across the globe, and in nearly every country, sector and industry. This was a goodtime to question the benefits of global portfolio diversification for risk reduction.While the mortgage and banking crises have been ongoing since the beginning of 2007,the equity market drop did not start until mid-summer of 2008, and the real equity marketcollapse happened in September 2008. The main two events that started equity market crisis werebankruptcy of Lehman Brother and the bailout of AIG. During the time period betweenSeptember 15th 2008 and late October 2008 the majority of the decline in equity markethappened. This equity crisis was universal and very severe, investors had no options to diversifytheir portfolios.By the end of 2008, with few exceptions, most equity indices were at 50% or lessof their end of 2006 levels, and down 60% from their highs. (www.researchgate.netThe question is about drop in equity markets, so it's pretty much drop is stocks, ETFs, etc.References in apa style should be no more then 2 pages


Paper#49690 | Written in 18-Jul-2015

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