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K.S. Badri Narayanan

MOST equity markets across the world ended the year 2003 on a firm note, thanks to several feel-good developments at the regional and at international levels.

Healthy US numbers: First to induce the positive sentiment was the US data on manufacturing; the Institute of Supply Management reported that its November index rose to 62.8, well above market expectations. This was followed by US business productivity data, which showed an annual rate of increase of 9.4 per cent in the third quarter — the fastest for 20 years. Another stronger-than-expected data, this time on US jobs, also boosted the sentiment. Meanwhile, as widely expected the US Federal Reserve kept the interest rates unchanged at 1 per cent. Following these positive factors, for the first time since May 2002, the Dow Jones Industrial Average breached the psychological 10,000-barrier during December.

Largely positive: This was followed by positive developments such as S&P's upgrade of its outlook for Germany's Deutsche Bank to `stable' from `neutral', forecast of better earnings by Qualcomm (a wireless communication company) of US, and upgrade of Renault's stock by BNP Paribas. The capture of former Iraqi President, Saddam Hussein, bolstered the sentiment further across the global markets. However, there were some anxious developments such as financial crisis at Parmalat, the Italian dairy products group, warning of sluggish earnings from Wal-Mart and fresh terror alerts. Though exporters such as carmakers suffered due to weak dollar, metal stocks led the rally in the Eurozone as gold, platinum and nickel soared to new peaks.

Happy Asia: The Thailand market index rose to its highest level nearly in seven years, boosted by banking stocks and breached the crucial 700-mark for the first time since April 1997. Jakarta's index touched its four-year high, benefited from renewed foreign interest in the telecom sector. The Hang Sang in Hong Kong rose to its best level in more than two years on anticipation of economic recovery. Korea's Kospi Index hit a 18-month high propelled by construction sector stocks on hopes of rising activity. For Singapore, data that showed lending picked up for an eight straight month in October rekindled buying activity.

Despite the passage of referendum, which re-ignited worries about Taiwan's relationship with China, the Taiwan stock index gained during December. The win by ruling Bharatiya Janata Party in key northern states in the assembly elections coupled with strong economic data and FII inflows perked up Indian equities to new highs.

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