The chart above represents a sad story, with all major stock markets now down at least 48% since their peaks in 2007/8. When the blog last reviewed performance in September, Shanghai had been the worst performer, down 69% from its October 2007 peak. Since then, it seems to have stabilised, with the market down 64% yesterday.
The other BRIC markets (Brazil, Russia, India) have continued their decline, and are now down 49%, 77% and 60% respectively, as exports collapse. Industrialised country markets have also seen further major declines, with the US S&P 500 now down 56%, similar to the loss on Germany's DAX. Japan is down 61%, whilst the UK emerges as the 'best' performer, down 'only' 48%.
This confirms the blog's fear, back in September, that we would see a second round of declines as the financial crisis evolved into a severe economic downturn. We will, no doubt, continue to see major bear market rallies as, for example, followed the Obama victory. But a sustained recovery will probably have to wait until earnings show signs of stabilising,