Page 31 - UTC Annual Report 2011

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Dow Jones Industrial Average Index 2007-2011
Dow Jones Industrial Average Index
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Unit Trust Corporation
Annual Report 2011 31
We are now in the 5th year of the current financial and economic crisis and it has been said that the recovery of the
global economy will be a “marathon and not a sprint”.The past year brought little relief as debt problems continued to
stymie growth in the Euro-zone, unemployment in the USA and in Europe remained high and the strong growth in
emerging economies which had been providing some balance to the low growth scenario in the major industrialized
economies, appeared to be slowing. The low interest rate policy followed by most countries remained in place,
except for a rise in the European Central Bank’s key rate for a brief period, so that financial returns for the
ordinary investor, who may have retreated from the stock markets,
remained at low levels.
The major stock markets were subject to continuing volatility,
but the trend was generally up, ending the year at levels
which were close to those that prevailed in the early months
of the crisis in 2008. The Dow Jones Industrial Average
Index (DJIA) ended the year 5.5 percent higher. Retail
investors continued to have reservations about the
stability of the trend given the slow improvement in
the broader economy, particularly unemployment,
new job growth, home sales and construction.
Low interest rates were also the norm in the
domestic market amid the slow pace of economic
growth, although the TT stock market index
provided an annual return of 21.21 percent,
mainly on the performance of the financial
sector and dividend paying stocks.The local
economy was estimated to have contracted
by 1.4 percent as output in the energy sector was reduced due to technical problems related to plant
maintenance and the Public Sector Investment Program was slow off the ground.
GLOBAL MARKETS
The year 2011 began with the expectations of continued robust growth in emerging
market economies and recovery in advanced economies. However, continuing fiscal policy
indecision in the United States, the ongoing distraction of debt problems in the Eurozone
and the increasing intensity of unrest in the Middle East and North Africa (MENA),
put further strain on global recovery efforts. The MENA unrest resulted in a surge in
oil prices in the second quarter. The credit rating agency, Standard & Poor’s, handed
the United States its first ever downgrade (from AAA to AA+), citing the lack of
fiscal corrective action. While the debt problems of Greece were dominant issues in
analyses of Eurozone stability, Portugal, Italy, Ireland and Spain also had their own
debt problems and the prospect of severe budget cutbacks led to civil unrest and loss
of production in several countries.The sovereign debt difficulties in the Euro area
continued to have a contagion effect on global financial and capital markets with
ongoing scrutiny of the balance sheets of the banking sector both in Europe and
North America. The sovereign credit ratings of the United Kingdom and of
CHART 1:
MOVEMENTS IN THE DOW JONES
INDUSTRIAL AVERAGE INDEX: 2007-2011