Facebook Twitter



The Japanese did it in six months. France did it in 19 months, and Britain beat us by 20 days.

While the new record set by the Dow Jones industrial average was celebrated as a symbolic comeback from the crash of 1987, other stock markets around the world have made faster recoveries than Wall Street."It wasn't that the U.S. did poorly," Mark Sladkus, a vice president at Morgan Stanley & Co., said Friday. "It's that the other markets had special circumstances."

A market measure compiled by Morgan Stanley and based on overall market performance shows that the U.S. market reached a new high on July 26, lagging Japan, Austria, Belgium, Denmark, France, the Netherlands, Norway and Sweden.

On the continent, 1992 became a phenomenon that investors could "sink their teeth into," and Europeans worked hard to sell investors on the concept of a single market of 320 million consumers, said Robert Brusca, chief economist at Nikko Securities Co. International Inc.

"It refocused attention on . . . the tremendous opportunities that will be there in the private sector" as trade barriers melt away and Europe becomes an unencumbered free market, Brusca said.

In advance of 1992, the mergers and acquisition fever that has heated up the U.S. market for so long "spread its virus to the continent," Brusca said.

Last year, Italian financier Carlo DeBenedetti almost single-handedly hoisted the Belgian market out of the doldrums with his hostile - and ultimately unsuccessful - bid for Societe Generale, a huge Belgian conglomerate.

In addition to outright mergers, European companies are fast forming cross-border alliances with like-minded firms. All that is bringing in "new technology, new competitors and more strength and vitality to markets that had been a little more parochial," Brusca said.

In London, the Financial Times-Stock Exchange 30-share index hit a new high on Aug. 4 and has since surpassed that mark. The broader 100-share index is just 46 points shy of its all-time high.

Japan, long the envy of other markets, posted a new high in April 1988, less than six months after Black Monday. But experts note the Japanese market did not fall as hard in the crash and therefore had less ground to regain than other markets.

Additionally, extremely low yields in the Japanese bond market gave stocks a boost. "There are not a lot of competing domestic instruments, so the stock market emerges as king," Brusca said.

This year, however, its performance has been ho-hum. A scandal in the top ranks of government has taken its toll, as has the weakening of the yen against the dollar. Japanese investors flush with cash are looking farther afield for places to stash their money.

Hong Kong, which also performed well following the crash riding the wave of enthusiasm over China's plans for economic expansion, was "slam-dunked" following the Tiananmen Square massacre, said Brusca. The key Hang Seng index, which hit a 1989 high of 3,309.6 in mid-May, plunged to 2,093.6 on June 5. It has yet to near its precrash high.

Surprisingly, some of the best post-crash opportunities can be found in emerging markets like Mexico, Malaysia, Thailand, Argentina and others, which allow foreigners to invest directly in securities. So far this year, Morgan Stanley has pegged their collective growth rate at about 33 percent.

"Over the long term, those markets will outperform others because they represent more rapidly expanding economies," Morgan Stanley's Sladkus said. They are clearly riskier but offer an option to investors bent on diversification.

Thanks to the recent strength of the dollar, the U.S. markets remain attractive, compared to their foreign counterparts.

"There's clearly a pretty consistent flow into U.S.-dollar assets, including stocks, largely because confidence in our currency has been restored," said Charles I. Clough, chief investment strategist at Merrill Lynch & Co. "A strong currency will just continually pull in foreign investments."

Other economic factors add to the allure of American stocks and bonds. "There's a good feeling in terms of interest rates coming down, corporate earnings going up, and that we've been able to avoid a hard landing," said Sladkus.