Geopolitics And Stock Markets. The Fall Of Communism.
In my opinion, the starting point should be November 9, 1989, the day when the Berlin Wall fell. Although it would take about another year for the reunification of West and East Germany, and two more years for the dissolution of the Soviet Union, it became clear on this day that the world order established after the Second World War was a thing of the past. Market economy triumphed over planned economy.
As seen in the comparative chart of dollar yields of major stock market indices below, the primary initial beneficiary was the DAX, that is not surprising. However, the euphoria was quickly replaced by concerns about the cost of integrating the East German economy. Nevertheless, the German stock market remained at the forefront throughout the decade and eventually outperformed not only its continental neighbors but also the S&P 500.
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