Its shares have lost 98 per cent of their value

Its shares have lost 98 per cent of their value.For destruction of value on a grander scale, you need only look a few places further up the league table to find Invensys, the sometime FTSE 100 engineering giant, which has seen £1.25bn wiped off its market capitalisation. Dozens of little stocks have been delisted or suspended with very little hope of return. Of those that have struggled to survive the whole year, the biotech group Xenova comes out bottom on the main market, thanks to the collapse of trials of its most exciting cancer drug. On AIM, the wooden spoon goes to Inter-Alliance, a chain of financial advisers which has needed to be bailed out with extra funds from shareholders. Trafficmaster emerged as the best performing fully listed share, despite being excluded from the FTSE All-Share, disbarring many fund managers from holding the stock. The company has been propelled into pole position only in the past month, thanks to contracts to put its vehicle tracking systems into Mazda, MG Rover and Nissan cars.As in many years, punters needed to fish in the more dangerous waters of AIM to get the best bargains and there turned out to have been more than 100 stocks in that market where you could have doubled your money.

Best of all was Caledon Resources, symbol of the stock market’s dawning realisation of the economic might of China, whose shares rose from 0.96p at the start of the year to 12.25p last Friday – a return of 880 per cent. Caledon explores for gold in China and other regions of Asia. Other gold miners also benefited from the soaring price of the precious metal, including the 2003 runner up, Oxus Gold, which is showing a return of 806 per cent.Plenty of opportunity to lose one’s shirt, too, of course. The software sector, which lost 60 per cent of its value last year, rebounded strongly, too.And who would have thought the FTSE All-Share’s winner would be Photo-Me International, which had provoked hilarity and mistrust in equal measure during the bear market by paying for acquisitions in old photo booths?But that is what 2003 has been all about: the rediscovery of the appetite for risk. After three years of misery for equity investors, the 15 per cent rebound in the UK stock market this year has been especially sweet, and the performance tables of 2002 have been turned almost on their head.
How many people guessed that the over-expanded telecoms group Cable & Wireless, which was last year’s most disappointing blue chip and had been all but written off as a basket case, would emerge as the FTSE 100’s star?It would have taken a brave punter to suggest the best performing sector of 2003 would turn out to be IT hardware, which includes equipment makers such as Marconi and the microchip designer ARM Holdings, and which had been the smelliest dog of 2002. So, farewell soon, 2003 And a fond farewell it will be, too.

Meanwhile, investment is picking up and employment is on the rise. But this is a story that perhaps has more relevance for China and India than it does for the traditional industrial heartlands of America and Europe. And, because of this, I suspect the bounce in activity seen in the second half of 2003 will not bring untold riches to everyone in the western world in 2004.Stephen King is managing director of economics at HSBCStephen.king hsbcib . Companies are feeling fitter, healthier and stronger than before, as they have struggled to reduce their cost base.

In response, profits have rebounded and shareholders have become a little bit happier, seeing some of their earlier huge losses restored. Instead, German companies may be choosing to invest in other parts of the world, notably in central and Eastern Europe.These arguments suggest the usual cyclical story may no longer be working in such a reliable fashion. Employment growth may be coming through, but it’s more likely to be in India or China than in the US itself. And, in the case of German companies, yes, they may well be investing. But investing in Germany? Why bother? Labour costs are high, labour markets are inflexible, the tax burden is onerous. If workers can be hired more cheaply elsewhere, then companies will probably do so.