In the last couple of months investors, wealth has eroded drastically. The coronavirus pandemic has depleted nearly 15 percent of the market capitalization of the UK stock market. The broader equity stock market index of the UK stock exchange, FTSE 100 which constitutes of the top hundred companies, having a presence in domestic as well as international markets, trading at 7,534 on 12 February 2020. Since then barometer gauge of the UK stock market has fallen by nearly 24 percent in value as the pandemic aggravated in the country.
In addition, FTSE 250, which basically reflects the domestic economy, fell by 41.33 percent in value by mid of March. The outbreak of the contagious virus had led to the bloodbath in the financial markets, which resulted in major sell-offs by the panic-stricken investors. Investors have lost confidence in the markets as they are hurt financially and emotionally.
It not for the first time, the UK stock market has witnessed similar wealth erosions in the past as well. During 2002-03, when SARS broke out, the FTSE 100 fell steeply by more than 30 percent in a period of six months. However, it took nearly three years for the broader equity stock market index of the UK to recover. During the financial crisis of 2007-08, the FTSE 100 again fell sharply by nearly 45 percent in a period of nine months, and it took nearly three years for the UK stock markets to embark on the path to recovery.
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