**6. Discussion and conclusion**

In this section, the results of the comparison between the dot-com bubble and today's crisis are summarised and interpreted. They are grouped into a macro perspective which takes into account the overall economic environment on the one hand. While on the other hand, the indices and ratios of the selected countries and stock exchanges will be interpreted, too. Both perspectives are structured according to the region under consideration.

There are many papers dealing with market bubbles, but only a few of them provide a look in a field of testing the recorded returns in such a way. It is very difficult to compare them. Taking into account the beginning of both situations for instance dot-com bubble and the further financial crisis of 2007, it can be said that they are very similar in many regards. More importantly, the countermeasures in both situations from the central banks were the same: lowering interest rates and providing liquidity. In both cases, the indices responded with a rapid growth and available capital was utilised, finding its way into higher return markets that are also riskier—volatile—by nature. However, there are two differences which must be taken into consideration.

Firstly, during the 1990s of the twentieth century, a new technology—personal computers and the internet—was on the verge of being introduced to average households. The scope of such impact was unforeseeable and the end of the potential for new usages of such technology is not in sight. Today the impact is better, though not perfectly, assessable through the existence of past data and experience from investors' perspectives. As own calculations show, this uncertainty lies inherently in the industry throughout the 1990s of the twentieth century. Despite the governments support for tech start-ups, there is hardly euphoria to the extent as before due to the aforementioned reasons. This result is in line with other current research which finds that even though higher stock valuations in general are possible, they are unlikely and unsustainable [60].

Secondly, the recent crisis is different since it affected the whole world market—not just the high-tech industry—at once in a very severe way, causing global pressure on growth as described before. This is different to the more regional and less of global-scale crises in the 1980s of the twentieth century, for instance Japan, and the 1990s of the twentieth century, for example, the United States, the 1998 Russian financial crisis and the 1997 Asian financial crisis. So the impact of low interest on the economies in the regions under consideration is yet to be seen. Even more, since the start of high volatility in the Chinese economy and the unannounced decrease in interest rates, there is potential for even greater issues in an economy which many countries and regions rely on. This could create a carry-trade similar to the one with Japan and the United States but on a much greater scale.

These two points stand in contrast to one another. On the one hand, there is less hype in comparison to the 1990s of the twentieth century in the tech industry, but on the other hand, there is so much capital available due to the previous crisis and current uncertainty that creates more opportunities for speculators.

**Figure 5** shows that on a regional level, the price-to-book ratios are again as high as right before the outbreak of the actual dot-com bubble. Therefore, they should be interpreted as a warning sign for investors. On a local level only the China Securities Index 300 ratio yet again

In this section, the results of the comparison between the dot-com bubble and today's crisis are summarised and interpreted. They are grouped into a macro perspective which takes into account the overall economic environment on the one hand. While on the other hand, the indices and ratios of the selected countries and stock exchanges will be interpreted, too. Both

There are many papers dealing with market bubbles, but only a few of them provide a look in a field of testing the recorded returns in such a way. It is very difficult to compare them. Taking into account the beginning of both situations for instance dot-com bubble and the further financial crisis of 2007, it can be said that they are very similar in many regards. More importantly, the countermeasures in both situations from the central banks were the same: lowering interest rates and providing liquidity. In both cases, the indices responded with a rapid growth and available capital was utilised, finding its way into higher return markets that are also riskier—volatile—by nature. However, there are two differences which must be

Firstly, during the 1990s of the twentieth century, a new technology—personal computers and the internet—was on the verge of being introduced to average households. The scope of such impact was unforeseeable and the end of the potential for new usages of such technology is not in sight. Today the impact is better, though not perfectly, assessable through the existence of past data and experience from investors' perspectives. As own calculations show, this uncertainty lies inherently in the industry throughout the 1990s of the twentieth century. Despite the governments support for tech start-ups, there is hardly euphoria to the extent as before due to the aforementioned reasons. This result is in line with other current research which finds that even though higher stock valuations in general are possible, they are unlikely and unsustainable [60]. Secondly, the recent crisis is different since it affected the whole world market—not just the high-tech industry—at once in a very severe way, causing global pressure on growth as described before. This is different to the more regional and less of global-scale crises in the 1980s of the twentieth century, for instance Japan, and the 1990s of the twentieth century, for example, the United States, the 1998 Russian financial crisis and the 1997 Asian financial crisis. So the impact of low interest on the economies in the regions under consideration is yet to be seen. Even more, since the start of high volatility in the Chinese economy and the unannounced decrease in interest rates, there is potential for even greater issues in an economy which many countries and regions rely on. This could create a carry-trade similar to the one

confirms the occurrence of a bubble in middle of 2015 with an extreme peak.

perspectives are structured according to the region under consideration.

with Japan and the United States but on a much greater scale.

**6. Discussion and conclusion**

104 Financial Management from an Emerging Market Perspective

taken into consideration.

There is one more level which can be discussed in this paper. It is an index level, where one can have a look at the contemporary trends and also the current development. On this level, the situation looks more diverse, even more so when differentiating between the broad regions and single countries.

Firstly, on a broader regional level, trends indicate an overall increase due to the stimuli across the world by central banks. For the industry under consideration, there are currently no extraordinary trends of a bubble visible. It must be noted, however, that the levels are to some extent as high as before the crisis or before the actual dot-com bubble in the United States. This is especially true for Europe and Asia. Still, as of 2015, earnings were able to grow simultaneously, making up for the increase in prices. Worrying is the recent development of earnings that are most visibly deteriorating in Europe while slightly decreasing in the United States and at least stagnating in Asia. Such trends, however, must be differentiated to normal business cycles.

Secondly, on a national level, the figures show greater amplitudes and interpretations can only be made from a narrow local perspective. In the United States, the Federal Reserve System is confident of being able to increase interest rates due to the regained trust of investors in the stability of the economy even though it is not yet fully recovered. Since it is a rate which acts as an anchor for investors around the world, the signal is necessary though. This action might come early enough to improve the situation while stopping the market from overheating like in the 1990s. In Germany, it is less possible to see the country on its own since it is tied to the euro area monetary union in which the other countries are further away from having recovered from the financial crisis. If the liquidity boost will continue throughout 2016–2017, it gives incentives for speculators and hence rising equity markets. Only the decrease in earnings might lower expectations and hence incentives to speculate. Even more unstable is the situation in China which experienced a major downturn of its economy as shown in the previous sections. This situation is likely to continue throughout 2016 according to business experts [61]. Closest to a bubblelike behaviour and ratios is the trend in summer 2015 for the China Securities Index 300 index. However, the extraordinary deviations cannot be confirmed even though the underlying data is from their database. In either case, this deviation is for the named reasons nowhere near the magnitude of the dot-com bubble. Addressing the research question of whether the current rise in indices across North America, Europe and Asia resembles the dot-com bubble, the answer is negative for the following reasons. While strong short-term deviations as seen in China in the summer of 2015 have occurred, they do not resemble a prolonged deviation of the magnitude in the late 1990s even though they could be called short-term bubbles, in the case of the China Securities Index 300 index in 2015. It can be said that at least the pre-conditions of the overall economies as well as the indices do resemble important trends on a broader level which were visible during the 1990s in the United States. On the other hand, earnings did growth and the increase and the raise in the interest rate by the Federal Reserve System signal the end of the crisis. Depending on the further development of the situation in China and overall economic situation the sentiment can still turn either way. As long as there is cheap liquidity in the market, indices can likely be used for speculation. Moreover, the hype of a new technology might be even found within another sector or a combination of two such as biotechnologies, information technology, virtual reality and healthcare for example. Therefore, the future situation highly depends on the business sentiment and performance of stressed economies such as China and Europe. With these findings, this paper hopes to give a basis for cross regional comparison for the rise of regional and local indices through the combined assessment of different theories and approaches. It remains the opportunity for future research to complement on the limitations and build on this basis.
