December Chill Cools 2002 FTSE All-World Returns

January 2, 2003 ( - The FTSE All-World Index fell by 4.9% in December, on its way to a third consecutive losing year, with 2002 ending down 18.86%, according to data by FTSE.

December’s declines were broadly spread with only Latin America, the Middle East and Africa escaping the trend. Investors appeared concerned about some faltering economic statistics in the US and Europe, nuclear tensions in the Koreas and the prospect of war with Iraq in 2003. The latter danger, along with a strike in Venezuela, pushed oil prices up sharply.

The best performing market of the month, and the year, was Pakistan, where the local index more than doubled over the course of 2002, due to the decision of many Pakistani investors to repatriate their funds from the west, to avoid the risk of being caught up in investigations linked to terrorist financing.

Elsewhere, strong returns were seen in Indonesia, Peru, Austria and Brazil.   December’s weaker performers included the Nordic region, Sweden, Korea, Finland and Turkey.

Sector Response

December’s sectoral winners were the defensive sectors that generally performed well in 2002, led by tobacco and the utilities. The top five sector performances, and their returns were:

  • Tobacco, 9.06%
  • Mining, 6.25%
  • Electricity, 5.03%
  • Water, 4.58%
  • Food Producers, 2.93%

Mining stocks had a good month, with gold prices surging in response to global political tensions.

Conversely, December’s worst sector performers were:

  • Information Technology and Hardware, -17.57%
  • Leisure, Entertainment & Hotels, -13.14%
  • Software & Computer Services, -10.18%
  • Electronic & Electrical Equipment, -9.41%
  • Life Assurance, -9.10%

The late autumn rally had been led by the technology stocks but they took another battering, with hardware, software and electronic stocks all featuring in the list of the worst five sectors. Life assurance companies, with their heavy exposure to the equity market, also suffered.