World stocks storm past tech bubble high
Mon May 8, 2006 9:22 AM ET
In LONDON story "UPDATE 2-World stocks storm past tech bubble high", please read in paragraph 6 ... It contains 2,618 stocks in 49 developed and emerging countries ... instead of ... As of the end of March it contained 1,798 stocks in 23 primarily developed countries. In paragraph 7 please read ... Venezuela with just 0.01 percent ... instead of ... New Zealand with just 0.08 percent. In paragraph 9 please read ... have been in emerging markets ... instead of ... are in emerging markets and are not part of the MSCI World Index. In paragraph 10 please read ... The all-country world index .... instead of ... The world index. (Corrects to show that emerging market stocks are in the index, and to clarify that it is referred to as the all-country world index). A corrected story follows. (Adds fresh comments, background) By Jeremy Gaunt, European Investment Correspondent LONDON, May 8 (Reuters) - World stocks stormed past highs reached during the 2000 tech bubble on Monday, with the MSCI World Index <.MSCIWD> hitting a record 349.06. The index's previous high was on March 27, 2000, when it reached 349.04 before roughly halving in value in a global equity crash. Equities have been rallying worldwide since early 2003 on the back of low interest rates and booming economies in countries such as the United States, China and India. Companies have also benefited from restrained labour-cost increases as inflation has remained generally in check. "The underpinning is good," said Jim Goff, director of research for Janus Capital. "Valuations do not seem very (costly). Earnings are growing quite dramatically." The MSCI index, which dropped back slightly after hitting the record, is widely watched as a gauge of global stocks. It contains 2,618 stocks in 49 developed and emerging countries. U.S. equities constitute almost half of the weighting of the index, with Japan, Britain, France, Canada and Germany following. The smallest weighting is Venezuela with just 0.01 percent. Despite their strength in the index, U.S. stocks have tended to lag others in the post-2003 rebound, and major indexes such as the S&P 500 <.SPX> and Dow Jones Industrial Average <.DJI> remain below their tech-bubble highs. Many of the star equity performers over the past few years, meanwhile, have been in emerging markets. MSCI's main emerging market index <.MSCIEF> has more than doubled since 2003. BUBBLE? The all-country world index has gained more than 12.5 percent so far this year while its emerging market stablemate is up nearly 25 percent. Such rises, along with gains in other major indexes, have raised some concerns that equities are heading for another fall -- especially as interest rates are generally rising worldwide. The world-driving U.S. economy is expected to slow down this year, and the pace of gains in equities is seen by some as unsustainable over the full year. But many investors nonetheless expect stocks to continue rising and to outperform bonds. Michael O'Sullivan, a strategist with State Street Global Markets, drew a distinction between the current rally and the one that led to the tech bubble bursting. "We are at a strong point in terms of ... earnings ... unlike in the tech bubble when you used to have imaginary earnings," he said. "The kind of sectors doing well are financials and oils which are big market caps, unlike tech which was relatively smaller." |
