Here are seven more questions covering the markets in 2008 - a hat tip to Ian Stewart for the content - answers can be found by clicking the extended blog text link below:
(1) Which was the best performing major currency in the world in 2008, rising by 21% against the dollar?
a. Swiss franc
b. Icelandic krona
c. Japanese yen
(2) A French antique wardrobe or armoire cost £1200 10 years ago. What would you pay for it today?
a. £200
b. £400
c. £600
(3) Which is the best performing world stock market in the year to date?
a. Venezuela
b. Cyprus
c. Colombia
(4) Which has been the world’s best performing housing market over the last 12 months?
a. Hong Kong
b. New Zealand
c. Belgium
(5) How much has the market value of the world’s banks changed since the peak in October 2007?
a. down 40%
b. down 55%
c. down 70%
(6) The cost of shipping goods around the world, measured by the Baltic Freight Index, rose dramatically in recent years, hitting a peak in May 2008. Where was the Baltic Freight Index on December 19 2008 relative to this peak?:
a. down 29%
b. down 43%
c. down 93%
(7) The UK FTSE 100 has fallen 36% from its peak in June 2007. How much did the FTSE 100 fall from peak to trough during the last equity bear market between 2000 and 2003?
a. down 23%
b. down 53%
c. down 83%
Answers
1/ C - The Yen
The yen was the world’s strongest major currency against the dollar in 2008. The Swiss Franc has risen by 4% and is benefiting from its traditional “safe haven” status. The Icelandic Krona fell by 84% against the dollar in the wake of that country’s financial crisis;
2/ A - £200
A recent Daily Telegraph article noted that antique prices have fallen sharply, with an antique armoire dropped from £1200 10 years ago to just £200 today. Changing fashions, a plentiful supply of cheap, modern furniture from the likes of IKEA, smaller homes and, more recently, the economic downturn have all been blamed for falling antique prices.
3/ C- Colombia
Colombia is the world’s best performing stock market, having fallen only 10% year to date. The market has been helped by the removal of capital controls on foreign portfolio investments in equities, high inflows of foreign investment, low interest rates and falling inflation. The Venezuelan market has fallen by 18% year to date, far better than most economies. Cyprus is the worst performing stock market and has fallen by 76% to date. Cypriot banks have been under pressure and property prices have fallen and are expected to fall further in 2009. The UK and US equity markets have fallen 35% and 39% respectively year to date.
4/ A - Hong Kong
House prices in Hong Kong have risen by 12.4% over the past 12 months reflecting the strength of the local economy. However, the market appears to have peaked and in Q3 2008 Hong Kong house prices fell. Belgium is the strongest western European housing market, with prices up 7.5% on a year-on-year basis. New Zealand house price have fallen 6.8% year on year.
5/ B - Down 55%
Ignoring capital raising world banks have lost 55% of their market value since their peak in October 2007. Write downs, slowing growth and a chronic lack of liquidity have been major drivers behind the falling market values.
6/ C - Down 93%
Shipping costs collapsed in the second half of 2008 as a result of the gathering global slowdown, falling commodity prices, increasing shipping supply and a lack of credit.
7/ B - Down 53%
The FTSE 100 fell more in dotcom crash of 2000-2003 than it has in this cycle. The index was hit by plunging valuations in the telecom and tech sectors and a major squeeze on corporate profits.
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