Dollar-Based Investors Eviscerated in Global Stocks

[marmar]

Dollar-Based Investors Eviscerated in Global Stocks
by Wolf Richter • January 18, 2016


[font color="blue"]Central banks have lost their aura of omnipotence.[/font]

In Saudi Arabia, the Tadawul All Share Index plunged 5.4% on Sunday and dropped further on Monday before ticking up a smidgen. It’s at the lowest level since March 2011. Soothsayers blamed oil, and what Iran will do to the already oversupplied oil market now that the nuclear sanctions have been lifted. But Saudi stocks started losing it in September 2014 and have since collapsed 50%.

Russia’s MICEX stock market index is down only 13% from its high in November, 2015. But the RTSI dollar-calculated index of Russian shares plunged over 7% on Monday as I’m writing this, is down 40% since May 2015 and 70% since August 2011. Every big rally in between was followed by an even bigger slide. The major difference between the dollar-calculated RTSI and the ruble-calculated MICEX is the value of the ruble, which has plunged 2% today to 79.3 rubles to the dollar, a new all-time low. It’s down 57% against the dollar since mid-2014 and 64% since mid-2011. The Central Bank isn’t even trying anymore to prop it up.

China’s Shanghai Composite is down 44% from its high in June 2015. During that time, the yuan has dropped about 6% against the dollar. So dollar-based investors took an additional loss, with the total loss amounting to over 52% (not including transaction costs and fees).

Dollar-based investors, when they buy foreign stocks, make two bets: that those stocks rise; and that the currency of those stocks at least remains stable against the dollar. When they catch it right, with both stocks and currency going up, the returns can be breath-taking. But the opposite happens when both go down, as they’ve been doing recently. And dollar-based investors are getting totally crushed. ....................(more)

http://wolfstreet.com/2016/01/18/dollar-based-investors-big-losses-in-global-stock-markets/

[Human101948]

1. Just watched jack Ryan Shadow Recruit

Similar scenario with a terrorist attack to grease the skids. (Hey, it's a movie!)

[PeoViejo]

2. Some Days, You get the Bear; some Days the Bear gets You. n/t

[safeinOhio]

3. Stronge Dollar

Good and bad, a draw for us.