We have been witnesses to some of the worst stock market crashes ever known. Driven by panic and external economic factors, a stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. The results are significant losses of paper wealth. Usually occurring after a prolonged period of rising stock prices and excessive economic optimism, these events are almost as old as the stock market itself. In fact, there has been hundreds of stock market crashes over the past decades! Today, we will take a look at some of the worst ones. From the Wall Street Crash of 1929 to the Eurozone Crisis, these are 25 Of The Worst Stock Market Crashes in History.
Souk Al-Manakh Stock Market Crash
The Souk Al-Manakh stock market crash was the crash of Kuwait’s unofficial stock market, the Souk Al-Manakh, in 1982. The stock market specialized in highly speculative and unregulated non-Kuwaiti companies, and – at its peak – its market capitalization was the third highest in the world (behind only the US and Japan). The crash had a devastating effect of Kuwait´s economy, it was one of causes of the ongoing Iran-Iraq War and it also pushed the entire Gulf region into a deep recession.
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Black Monday of 1987
The Black Monday of 1987 refers to Monday, October 19, 1987 when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, hitting the US after other markets had already declined by a significant margin. In Australia and New Zealand, the 1987 crash is also referred to as “Black Tuesday” because of the time zone difference. Possible causes for the decline included program trading, overvaluation, illiquidity and market psychology.
Friday the 13th Mini-Crash
The Friday the 13th mini-crash was a stock market crash that occurred on Friday, October 13, 1989. It was apparently caused by a reaction to a news story of the breakdown of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company of United Airlines. When the UAL deal fell through, it helped trigger the collapse of the junk bond market. The deal unraveled because the Association of Flight Attendants pulled out of the deal when management, in negotiations over an Employee Stock Ownership Plan designed to fund the leveraged buyout, refused to agree to terms.
Japanese Asset Price Bubble
Lasting from 1986 to 1991, the Japanese Asset Price Bubble was an economic bubble in Japan in which real estate and stock market prices were greatly inflated. The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. The bursting of the bubble significantly contributed to what is now know as the Lost Decade – a 10-year collapse of the Japanese economy.
1997 Asian Financial Crisis
The 1997 Asian Financial Crisis began in Thailand in July 1997 but soon spread into other Southeast Asian countries. During the crisis, foreign investors deserted emerging Asian shares fueled by hot money, which eventually resulted in major crashes in several Asian countries including Thailand, Indonesia, South Korea, Hong Long, Laos, Philippines, Malaysia, Vietnam, China, Singapore etc. The crisis reached the climax on October 27, 1997 in a mini-crash marked by one of the biggest Dow Jones Industrial Average point losses in history.