Dresdner Bank - Commerzbank International SA

Dresdner Bank Luxembourg S.A. Annual Report 2008
16
Management Report for Financial Year 2008
General developments: A year of extremes – global financial crisis causes deepest
recession – governments introduce rescue packages on an astronomical scale
The year 2008 will doubtless be remembered as one of the most difficult years in the history of the stock
markets. Weighed down by a global financial crisis that continued to deepen over the course of the year,
as well as significantly worsening economic forecasts, the stock markets have suffered heavy losses in
value across the world. The share price losses in the Euro STOXX since the beginning of the year amounted
to over 50% at the peak. Thanks to the most recent stabilisation, losses have been held to approx. 40%.
As late as the first half-year of 2008 the higher price of oil due to robust demand in the emerging markets
was leading to sharply rising inflation rates, placing an additional burden on the capital markets. Not till
mid-September, with increasing economic scepticism and the resulting fall of oil and commodity prices,
did we see a drop in inflation rates.
The crisis in the financial system reached a new dimension after the collapse of Lehman Brothers. As risk
aversion widened, credit markets practically froze up, drawing the real economy into the crisis as well.
After the first quarter of 2008 in which economic growth in the Eurozone was surprisingly strong, negative
growth rates had to be reported already in the second and third quarter. The economic downturn gained
momentum worldwide. The mood indicators painted a grim picture, which was borne out by hard facts
such as significant drops in the volume of orders received. The fourth quarter of 2008 was disappointing
for both the corporate sector and the investors.