Country Equity Markets' Performance YTD

Global stock market country's performance on a year to date basis yielded some interesting observations. The respected Bespoke Investment Group has featured the table below recently. The average year to date change for all 82 countries is 5.39%.

The S&P 500's year to date change of -1.24% is obviously below both of these. The US currently ranks 53rd out of 82 in terms of 2010 performance.

At the top of the list is Sri Lanka with a 2010 gain of 73.69%. Bangladesh ranks second at 49.37%, followed by Estonia 41.94%, Ukraine 40.86%, and Latvia 40.26%.

The bigger emerging markets have not fared so well. India has been the best performing BRIC country so far this year with a gain of 4.33%. Russia ranks second at 1.42%, Brazil ranks third at -2.43%, and China is down the most at -18.97%.

The developed markets have also fared poorly so far. Canada is currently the top G7 country with a gain of 3.26%. Germany and Britain are the other two G7 countries that are up year to date but only just, while Japan is the G7 country that is down the most year to date (-13.58%).

Overall, Bermuda has seen the biggest losses this year with a decline of 38.25%. Greece is the second worst at -24.56%.

It looks like the flow of funds indicate a benign investing environment for the bigger markets, be it emerging or developed. Its still a tug of war, a delicate balance between the bulls and the bears. To break it down, its torn between the group that thinks that most of the developed nations may still be in for a double dip or that the stimulus programs have run its course. The other group thinks that there is still immense liquidity staying on the sidelines which may flow back into equities in a big way this year.



I am in the latter camp. To me, if you think there is the likelihood of a double dip, it will still translate to a low interest rate environment or that more stimulus will be offered. Both still bullish factors.

If there is no double dip, some of the liquidity will move back to equities to get better returns. Hence it is a inherently better to be long and bullish on stocks for the rest of the year.

Malaysia, together with Thailand and Indonesia have done very well, notching 12.8%, 26.6% and 24.8% respectively.



The other fact which I find comforting is that markets are not ignorant, they have penalised Japan and China markets heavily so far this year. Japan, for further aggravating their deflationary economy. China for having to continue to tighten the taps to control over exuberance in property and indiscriminate lending.

Country Stock Markets Performance - Markets Diverging?

The markets have been wrought with worries about a few EU countries and the Euro currency which have rattled global equity markets. Sovereign debt credit default swaps have been rising sharply for countries such as Greece and Portugal in recent days. Equity markets in Spain, Portugal, and Hungary are down more than 5% today alone.

Below Bespoke highlighted the year to date performance and performance since the 19 January 2010 peak for the major equity markets of 81 countries around the world.

Spain is down the most year to date with a decline of 13.45%. Greece is second worse with a decline of 11.13%, followed by Puerto Rico, Jamaica, Slovakia, and China. Italy, Germany, and France are down more than 5% year to date, while the UK is down 4.87%. The US is down 3.58%, but it has been the second best performing G-7 country year to date behind Japan. Thirty-eight of the 81 countries are still up year to date, so things haven't gotten that bad everywhere. Latvia, Lithuania, and Estonia are all up more than 20%.

What's interesting is to see where Malaysia is, we are right at the median. One can safely say that our correlation to major equity markets have been very mild - in other words we are still not a preferred destination for foreign funds. Can be good or bad, you do not see much whiplash action when these funds withdraw. Even though our KLCI index has tumbled, its mainly due to weakness in the big caps, if you had been in mid or small caps, your losses would have been muted.

Indonesia and Vietnam have held up even better as I did see some foreign funds preferring to have an exposure there. Usually in this type of correction, where macro factors and sovereign debt are involved, foreign funds in smaller emerging markets are quite OK to stay put. If they feared funds withdrawals, it is easier to get money out of HK, Taiwan and Brazil.

Some funds have certainly taken chips off the table, however I do not see this as a prolonged bear market at all. Where else will they put money to work? Treasuries?

p/s photos: Sowelu