The FTSE All-World Index fell 8% over the month in both dollar and local currency terms, as, like their US counterparts, global investors continued to worry about the reliability of corporate accounting and the health of the global economic recovery.
Only four countries in the FTSE All-World Index managed to gain ground in dollar terms – even worse than June when just stocks in just nine of the 48 constituent countries rose (see Dollar Doldrums Drag Global Market Performance in June ).
The best performer of the month was Argentina as the currency and equity market stabilized after the nation avoided the immediate prospect of debt default. Bankers flew to Buenos Aires to help broker a deal between the government and the International Monetary Fund for an economic recovery package.
In other FTSE-monitored nations, the Czech Republic gained ground ahead of its hoped-for entry into the European Union. The Pakistani market benefited from the reduction of tensions with India, lower interest rates, and the continued repatriation of funds by domestic investors.
Brazil was the world’s worst laggard in dollar terms as the real plunged to new lows, as investors bailed out ahead of October’s Presidential elections and amid concern about the country’s dollar-denominated debt.
The other big losers were largely European. The biggest problem was the Netherlands, which suffered as its biggest stock, Royal Dutch, was removed from the S&P 500 index.
According to FTSE, the sell-off in equities was broadly-based with only two sectors gaining ground on the month, tobacco – a classic defensive play – and diversified industrials. For a change technology, media and telecom sectors were not among the losers.