The third quarter was the worst for Dutch shareholders since World War II. Share prices fell by an average 31.8 percent. Statistics Netherlandsâ€™ figures show that the value of Dutch shares has dropped by more than 410 billion euro in the last two years. The total return on Dutch shares lagged strongly behind the global average.
Largest fall in share prices since World War II
After a drop of 15.6 percent in share prices in the second quarter of 2002, prices plummeted further in the third quarter. Following a number of strong fluctuations, the CBS share price index closed this period 31.8 percent down, the largest fall since the World War II.
Most people are blaming pessimistic business news, disappointing macroeconomic indicators and the threat of war in the Middle East for the sharp falls.
The last record loss was observed at the time of the stock market crash in 1987 when prices fell by an average 30.8 percent. Share value down 410 billion euro in two years In the first nine months of 2002 the CBS share price index fell by 39.4 percent.
Since the all-time high on 4 September 2000, share prices in Amsterdam have fallen by an average 57.0 percent, reducing the value of securities on the Amsterdam stock exchange by just over 410 billion euro. The index is back at the level of December 1996.
Amsterdam shares lagging behind world index
In the third quarter of 2002 the total return on Dutch shares, including paid dividend, was â€“31.0 percent. The return was thus lower than the corresponding MSCI world index, which fell by 18.3 percent in the same quarter. Part of the difference can be explained by the greater weight of financial companies on the Amsterdam market. Banks and insurance companies were among the largest losers.
Return on shares negative in all sectors
All the sectors for which Statistics Netherlands calculates an index closed third quarter with losses. Shareholders in companies in the transport, storage and communications sector were least worse off in this quarter, with a return of â€“7 percent. The loss remained limited due to the recovery for a number of telecom shares. The heaviest blows fell in the capital goods industry (-48.8 percent) and the finance sector (-43.0 percent).
Positive return on bonds
With the negative sentiment on the share markets, more investors sought refuge in safer investments such as bonds. The total return on Dutch bonds was 4.0 percent in the period July-September 2002. Real estate companies investing in Dutch residential and non-residential properties booked a positive return in the third quarter (2.6 percent), triggered by a takeover bid for one of the companies.
Slump affects investment funds too Effects of the slump on the stock markets also reached investment funds investing in shares. Share funds investing in the Far East were best off with a loss of 14.5 percent, followed by funds investing in North American companies (-16.3 percent). Investment funds investing in Dutch shares did a lot worse: their losses of 30.1 percent were in the region of the average loss on all Dutch shares together.
(source: Statistics Netherlands)