Global stock markets pummelled

Let’s count the financial losses as a result of Brexit.

According to Today’s paper (25 June 2016), more than US$2 trillion were wiped off the value of stocks worldwide.

This US$2 trillion is not a figure of actual loss to investors. Since there is a buyer and a seller in a share transaction trade, does this mean that some traders gained and other traders lost as a result yesterday’s trade (to a tune of US$2 trillion)?

To calculate actual gain or loss, investor who traded has to compare actual cost of share owned against what he got on sale of that share. If an investor did not trade, his portfolio of shares would have “lost” value as a result of new low share prices. This is considered paper losses.

The US$2 trillion figure is just what the stock indices lost in value on paper. The fund houses with stocks in their portfolio would have to show a lower market value of these stocks when reporting to investors. In time to come, stock indices may rise and the value of the stock portfolio would rise again wiping out the losses reported before.

After yesterday, the stock indices and the year-to-date changes are shown in the table below.

Stock Index 31-Dec-15 24-Jun-16 Change (%)
Nikkei 225 (Japan) 19,033.71 14,952.02 -21.44%
Shanghai Composite (China) 3,546.13 2,854.29 -19.51%
CAC 40 (France) 4,637.06 4,106.73 -11.44%
Germany DAX 10,743.01 9,557.16 -11.04%
Hang Seng (HK) 21,914.40 20,259.13 -7.55%
Nasdaq (USA) 5,007.41 4,707.98 -5.98%
STI (Singapore) 2,882.73 2,735.39 -5.11%
Australia All Ordinaries 5,344.60 5,192.80 -2.84%
Kospi (Korea) 1,961.31 1,925.24 -1.84%
FTSE100 (UK) 6,242.32 6,138.69 -1.66%
S&P 500 (USA) 2,043.94 2,037.41 -0.32%
Dow Jones (USA) 17,425.03 17,400.75 -0.14%
Mumbai BSESN 26,117.54 26,397.71 1.07%
Taiwan Weighted 8,338.06 8,476.99 1.67%

Some stock indices had it real bad. STI is down 5.11% since the start of 2016.

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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