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BRIC stock marts saw biggest falls in '08: World Bank

Source: PTI
June 23, 2009 14:05 IST
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The global financial crisis has severely impacted equity markets in developing countries with BRIC (Brazil, Russia, India and China) nations witnessing some of the biggest declines in 2008, a World Bank report says.

The impact of the sell-off on local equity markets was widespread among developing countries, but some were hurt more than others.

"(The) Stock markets in Brazil, China, India, and Russia experienced some of the biggest declines in 2008," the World Bank said in its reportĀ Global Development Finance 2009: Charting a Global Recovery.

Russia emerged as the worst performer among the four BRIC nations and saw the highest 72.5 per cent decline in local currency terms during last year.

"Markets in the other three countries lost more than half of their value -- Brazil posted a 40 per cent decline, India 52 per cent, and China 66 per cent," the report said.

Further, the magnitude of the correction during the second half of the year was much more severe for Brazil and Russia than for China and India.

The report pointed that the difference in impact was due to the fact that sharp drop in commodity prices affected Brazil and Russia more than India and China.

Besides, even the best-performing emerging markets -- those in Chile, Mexico, and South Africa -- posted losses of more than 20 per cent in 2008.

Those with heavy external financing needs (especially certain emerging European economies) suffered larger declines in stock market prices, the report added.

"Due to the broad scope of the crisis, its impact on equity prices in developing countries has been deeper and broader in comparison to past episodes," the World Bank report stated.

Equity issues in developing countries plunged with the fall in stock markets. Gross equity issuance fell to $67.6 billion in 2008, compared with $202.16 billion in 2007, it added.

Developing country companies only raised $3.8 billion in the fourth quarter of last year, posting the worst quarterly volume since the third quarter of 2004.

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