Comment
Take a trip round Demoland, a mythical
country designed to give you a sample of the real thing.Comment
These are the weigjhts of each country in the P/T Indexes for bonds and shares
respectively.
Note
The latest date at which elections for the legislature may legally be held.
Basis for Calculation
10 years historic data for population, 16 years for GDP, EPS (below) and
Inflation. GDP/Head as at 1998 at current prices and exchange rates
Note
Global averages relate to mature OECD economies and do not include emerging
markets.
Investment Vehicles
Availability of specialist fund or leading company that may be used as a market
proxy.
Note
There are different RouteMaps for bonds, forex and
shares. Each one contains the appropriate section on market history. |
DEMOLAND |
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Growth Stock Mania |
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Regional and Global Weights |
Europe |
World |
|
| Gross Domestic Product: |
25% |
8% |
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| Stock Market Capitalisation: |
15% |
6% |
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| Political Structure |
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| Government is
built on a system of checks and balances with both elected Presidency and Congress as well
as an independent judiciary. This prevents extremes, but has the consequence that change
may be hard to achieve. Only on occasion have both houses of the legislature and
Presidency been held by the same party. |
| Political History |
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| For investors the single most important political event was
the general election of May 1987 which marked the first move to the right, as a grand
Coalition ended decades of rule by left wing parties. This trend was reinforced by the
next election, in March 1991, which brought about the first government to exclude
socialist parties. |
| Political Statistics |
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| Current Administration: |
Coalition |
Election
Cycle: |
4 Years |
| Political Orientation: |
Centre-Right |
Legislature Elections: |
Jun/2003 |
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| Economic Structure |
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| This economy is now de-industrialising as services and
technology become increasingly dominant. While the country is an oil importer,
susceptibility to oil price movements is much reduced owing to gas production and
de-industrialisation. The most important
trading partner is United States, which accounts on average for 10% of exports and
imports. |
| Economic History |
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|
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| There were recessions in 1975 and 1980/81 due to successive
oil crises and global economic downturns. Inflation peaked at 11% in 1974. |
| Economic Statistics |
Historic Data |
vs. Global
Average |
|
| Population Growth: |
0.4% |
-0.2% |
|
| GDP Growth Rate: |
2.4% |
0.0% |
|
| Rate of Inflation: |
3.6% |
0.3% |
|
| GDP per Head: |
$22,000 |
130% |
|
| Agriculture / GDP: |
2% |
-1% |
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| Industry / GDP: |
36% |
6% |
|
| Services / GDP: |
62% |
-5% |
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| Stock Market Structure |
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| The emergence of
an equity cult has been the most significant structural changes over the past quarter of a
century as inflation has been conquered, exchange controls dismantled and savings
redirected from bonds and real estate to equity markets. Privatised former state owned
phone and utility companies have made the biggest influence on sector weightings. |
| Stock Market History |
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| Shares had been
a dull investment, moving sideways in a narrow band for two decades, before the explosive
break-out of late 1982, when British institutions "discovered" Demoland, a few
months after the great Disinflation bull market began on Wall Street. There have been wide
swings in relative performance, with good runs in 1984/86 based on "discovey",
in 1989/90 based on German Unification and in 1997/98 based on EU convergence. |
| Stock Market Statistics |
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| EPS Growth: |
6% |
Real EPS Growth: |
3% |
| U.K. Investment Trust: |
Yes |
U.S. Closed End Fund: |
Yes |
| Largest Company: |
Universal Widgets |
Principle Activity: |
Electrical Equipment |
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| Bond Market History |
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| Domestic bonds suffered the worldwide nadir of the early
Eighties, based on the cyclical peak of inflation, coupled with an increase in real yields
to record levels. Since then these bonds have participated fully in the global bull
market, swings in relative performance being explained by currency movements. These
largely account for interim lows in 1984, 1994 and 1999 compared to world averages. |
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| Forex Market History |
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| This currency has largely tracked the performance of its main
trading partner, the DM. At times it has been formally linked through the Snake and ERM.
Thus it was swept upwards in 1980 owing to successful anti-inflationary policies,
downwards during the US$ bubble of 1984 and up again to 1990 as that bubble burst.
Recently the weakness of the Euro in its first year has dragged the currency down. |
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