Last year was an annus horribilus for European investors and the ex-UK sharemarket was the worst hit global sector.

European equities overall declined by 29.4 per cent and several countries were particularly hard hit, including Germany which was down a thumping 43.3 per cent due to troubled financial and telecom sectors.

The ex-UK sector has underperformed the rest of the world for the past two years after five years of outperformance.

European markets, like the US, continued to be affected by the aftershocks of September 11 in 2002, which were magnified by a series of corporate frauds and accounting scandals which rocked investor confidence, a backdrop of ong...