THE MSCI World Index, the global benchmark for stocks in developed nations that tumbled into a bear market last week, may not stop falling until it reaches a three-year low, if history is any guide.
The measure of 1,742 companies in 23 markets slid 1.1 percent to 1,345.47 last Friday, bringing the loss since its October record to 20 percent.
A decline of another 14 percent would match the average slump of seven bear markets since calculations on the index began in 1969, data compiled by Birinyi Associates Inc and Bloomberg News show.
Shares around the world dropped for six straight weeks, the longest streak since October 2002, as losses and writedowns at banks exceeded US$400 billion, oil prices rose to a record and growing concerns about the health of Fannie Mae and Freddie Mac caused their stocks to plunge more than 60 percent.
Companies in the Standard & Poor's 500 Index will report a 14 percent decline in second-quarter profits, according to estimates of analysts.
"It is unlikely we have seen the low point for equity markets," said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London. "The next few months will see worse news on economic growth, profits and inflation, and worries about the financial sector are also likely to persist."
The MSCI World's retreat has lasted 257 calendar days. In the seven previous bear markets, the index fell an average of 31 percent from its peak over 391 days, according to data from Birinyi Associates, the Connecticut-based research and money management firm.
The MSCI World yesterday added 0.2 percent to 1,348.67.