Last year was the second worst year for the stock market since the Second World War. Figures by Statistics Netherlands show that the only year in which investors in Dutch shares suffered heavier losses was during the oil crisis of 1974. Investors in bonds and property funds were the only ones to have a positive result in 2001.
Biggest slump in share prices since WW II
Despite a fourth quarter recovery, 2001 was a terrible year for shareholders. Shares dropped almost 140 billion euro in value within one year. Dutch share prices fell by an average of 21.1% in 2001. This constituted the second biggest drop within one calendar year since World War II. Only during the 1974 oil crisis did share prices fall more (-26.9%). In 1987 – the year when the stock market crashed – share prices fell by the same order of magnitude (-21.0%).
Positive results for investors in bonds and property funds
2001 was not negative for all investors. Investors in property funds showed the best results last year with an average yield of +10.3%. Investments in bonds also yielded positive results in 2001. The flight in bonds due to the drop in share prices and the worldwide slowdown of
the economy made for lower interest rates on the money market and higher bond prices. The total return on Dutch bonds was +6.0% in 2001.
Shares still show better long-term results than bonds
Despite the very negative yield in 2001, shares are still scoring better in the long term than bonds. The total yield on shares, including dividends paid, was 15.6% over the last 18 years. This is much higher than the average yield of bonds has been since the start of the CBS total return index for bonds on 31 December 1983 (7.7%).
Amsterdam shares below world index
The yield of Dutch shares for 2001, including dividends was –19.2%. This means that the total returns in Amsterdam were below the world average, which fell by 11.7% according to the MSCI index. US shares suffered limited damage, with the Dow Jones index dipping 7.7% in
2001.
Construction exception to the rule
The construction sector, which yielded a total return of +19.0%, was the positive exception to the rule among industries. All other sectors for which Statistics Netherlands calculated an index had negative results in 2001. The transport and communication sectors (-38.4%) and non-financial services (-31.3%) saw the greatest losses. In the long-term perspective, since 1983, there are above average annual scores for trade (17.8%) and financial institutions (17.5%). The sector transport and communication lags far behind this with a yield of 7.5%.
Equity funds below index
Investment funds specializing in Dutch shares yielded a result of -21.5% in 2001. This is less than the yield for all Dutch shares together (-19.2%). The worldwide investment funds, with a yield of –22.3%, also did far worse than the average for the market in which they invested,
(-11.7%).
(source: CBS - Statistics Netherlands)
