Price movements in international equity markets were highly volatile in 2007. The majority of financial markets nevertheless showed positive performance over the year as a whole.
Equity markets continued their positive trend with hardly a pause at the beginning of the year. A short correction originating from the Shanghai Stock Exchange took place in February. The performance of equity markets was extremely positive during the following months. Driven by outstanding earnings and numerous mergers and acquisitions, most financial markets reached new record highs or highs not seen for many years. Prices declined sharply in the second half of the year, however, due to the crisis in the US mortgage market, which resulted in a reassessment of the risk of real estate holdings. Inflation fears resulting from rising commodity, energy and food prices led to drastic declines in equity markets. Even a change in central bank interest rate policy and an injection of additional liquidity only created short-term relief of stock market tensions.
Despite large price fluctuations, the Dow Jones Industrial Average (in USD) showed an increase of 6.4% in 2007. The Dow Jones EuroSTOXX 50 (in EUR) even recorded a gain of 6.8%. The Nikkei 225 Index (in JPY) recorded a loss of 11.1%.
Stock exchanges in the emerging markets, particularly those in the CEE region, recorded outstanding performance in 2007. An exceptionally dynamic economy allowed them to distance themselves from the events taking place on Western stock exchanges, thereby achieving higher performance. In spite of the turbulence following the US mortgage crisis and increasing investor risk aversion, the CECE Index (calculated in EUR) achieved positive performance of 10.5%.