Global Equities in Tandem

1990-1995 DIVERSIFICATION WORKED

Global diversification proved effective in international portfolio investing due to:
Disparity in growth rates among major economies;
Brunt of world recession;
Relative inefficiencies in international portfolio investments (Emerging Markets Hysteria had yet to unfold)

* Fed raised rates 6 times for a total of 250 bps (Feb, Mar, Apr, May, Aug, Nov)
** The Peso Crisis and the Uprising in Chiapas
*** Capital Exodus from Mexico heightened triggered overall loss of confidence in Emerging Markets. This was compounded by the collapse of Barings Bank
GDP growth in industrialized nations: 1992= 2.1%, 1993= 1.4%, 1994= 3.3%, 1995=2.7%

1994-1996 TRANSITIONS

Broadening global recovery, US bail-out of Mexico, and the US entry into the "New Economy" paradigm all led to improved global market sentiment, which brought markets more in line.

GDP growth in industrialized nations: 1995= 2.7%, 1996= 3.2%

1997-2000 UNIFORMITY

As world economies begin to sustain their recoveries and cross-border protfolio flows accelerate, global stock markets move in tandem, making global diversification harder to achieve, simply based on geographical plays.

GDP growth in industrialized nations: 1997= 3.4%, 1998= 2.4%, 1999= 3.2% 2000 Forecast = 4.2%