For Many Foreign Stocks, It’s Well Beyond a Question of ‘If’

On Wall Street, the big debate is whether the U.S. market is in the midst of a short-term correction or heading for a full-fledged bear market--the latter usually defined as a drop of 20% or more in key indexes, such as the Dow Jones industrials.

With the Dow off 9.4% from its recent record high, a bear market still is a ways away.

But in many foreign markets--and more than just Asian markets--the bear already is large and in charge.

Here’s a rundown of how much damage has been done to global equity markets recently:

THE AMERICAS

* Mexico: No question--it’s a bear market south of the border.

Mexico’s benchmark stock index fell 2.8% Tuesday to its lowest level in 16 months, led by banking stocks, as the central bank’s bid to shore up the crumbling peso drove up borrowing costs and made investors shy away from equities.

The peso fell to a record low of 9.20 to the dollar.

The main share index, now at 3,628.45, peaked at 5,396 last October--before the first big shock to world markets from Asia’s economic crisis.

That means Mexican stocks now have plunged 33% in peso terms--and more in dollar terms, given the peso’s devaluation.

* Canada: Like the peso, the Canadian dollar has been hitting record lows against the U.S. dollar, as investors focus on sinking commodity prices and their harmful effect on the Canadian economy (a big exporter of energy, timber, precious metals, etc.).

Canada’s main stock index, the Toronto Stock Exchange 300, plunged 3.2% on Tuesday--its 12th loss in 14 sessions--to 6,312.92.

That leaves it nearly 20% below its late-April record high.

Investors now fear the Canadian central bank will raise interest rates to bolster the dollar. That could further slow the Canadian economy.

* Brazil: The main share index fell 4.1% on Tuesday, adding to a decline in recent months that has pulled it down 37% in local currency terms.

Worries about the slowing Brazilian economy sent the government’s international bonds plunging in value Tuesday, driving up interest rates and making it more expensive for dollar-borrowers such as the state petroleum company to finance expansion plans.

Since trading on the Brazilian market, or Bovespa, is greater than on all other Latin American stock markets combined, the country’s market tends to get hit particularly hard with global fund managers look for emerging market assets to sell.

“Brazil is paying a price for its liquid market,” one analyst said.

* Other Latin American markets: Argentine and Venezuelan shares, among others, are at or near two-year lows, and well into bear market declines.

EUROPE

* Britain: The main stock index, the FTSE-100, fell 2.8% on Tuesday to a six-month low.

But the market has fallen 12% from its peak, so it is fairly closely tracking the damage in major U.S. shares.

Still, with Asia’s economic crisis weighing on many British multinational companies, “There’s clearly going to be further deterioration of people’s profit expectations and further profit warnings against the background a slowing economy,” said Richard Buxton, the director of the institutional and mutual fund group at Baring Asset Management.

The situation is more dicey because the Bank of England already has been raising short-term interest rates to slow domestic demand.

But long-term British bond yields on Tuesday sank to their lowest level in more than 30 years, fueled by “save-haven” demand on fears that Russia may default on debt repayments.

* Germany: A powerful bull market in German shares this year, driven in part by optimism over Europe’s monetary union starting Jan. 1, has suffered a major interruption,

The benchmark DAX index slumped 3.8% on Tuesday, and now has fallen 15% from the record high set on July 21.

Even so, the DAX still is up 24% year-to-date in local currency terms--a much bigger gain than the 10.2% rise in the U.S. Standard & Poor’s 500 index year-to-date.

German shares are most at risk from Russia’s continuing troubles, analysts warn. The plus side: As in Britain, German bond yields are hitting record lows amid a flight to quality.

* France: Tracking the German market, the main French share index fall 2.4% on Tuesday, and now has surrendered 13% from its recent peak.

It still is up 28% year-to-date in local currency terms.

* Other European markets: Not surprisingly, the markets that have been strongest so far this year are falling fastest now, as investors take profits.

The Italian market dove 2.8% on Tuesday. It still is up 36% since Jan. 1. The Spanish market lost 3.3% on Tuesday and is up 34% for the year.

ASIA

Nowhere are markets more depressed than in the region where the current global crisis began 13 months ago.

* Hong Kong: The Hang Seng index fell Tuesday to its lowest level in five years, as concern mounted over tumbling corporate earnings and the stability of China’s currency.

The benchmark index fell 3.6% to 6.779, lowest since July 28, 1995.

* Singapore: The Straits Times index fell to its lowest in almost ten years on concern about a slowing economy and a possible devaluation of the Chinese yuan.

“The [economic] fundamentals are still very, very negative,” said Chia Yew Boon, head of research in Santander Investment Securities Singapore. With economic problems in Japan, China, Hong Kong and Malaysia, he said, “there is no shortage of suspects.”

The benchmark index dropped briefly below the 1,000 level for the first time in almost 10 years, before closing lower at 1,007.93, for a drop of 31.34 points, or 3%.

The index is at its lowest level since Dec. 19, 1988.

Malaysian stocks also are at 10-year lows. In Manila, stocks are at five-year lows. In Thailand shares have slid to 11-year lows.

How awful is that? Imagine the Dow Jones industrials trading at 2,000 again.