World Markets Weekend Review: Indexes Tumble (Except in China)
Guest post by Doug Short.
The previous week’s rally turned into a rout last week, except for China. The Shanghai Composite was the top finisher with a 0.90% gain with Hong Kong’s Hang Seng close behind with a 0.59% weekly close. The other six markets on my watch list finished deep in the red, ranging from the third-place FTSE 100 at -1.32% to the Nikkei 225 in distant last place at -3.71%. The S&P 500 finished sixth at -2.21%, just fractionally ahead of the DAXK at -2.24%. It was a grim week!
This week two indexes on the watch list are in bear territory — the traditional designation for a 20% decline from an interim high — unchanged from last week. See the table inset (lower right) in the chart below. At the bottom of the Bear Zone is, of course, the Shanghai Composite, which is a sobering 39.36% off its interim high of August 2009. The other bear-zone index is Japan’s Nikkei, which slid deeper into the red, 24.43% from its interim high of April 2010. At the other end of the inset, the S&P 500 is now 2.54% off its interim high.
As for year-to-date performance, here is a table showing the 2012 peak percentage gains, sorted in that order, and current YTD gains for the eight indexes. The BSE SENSEX closed the week fractionally off its 2012 high, which it set the day before. In contrast, the Shanghai continues to hold dubious distinction of being the only index with a YTD loss.
A Closer Look at the Last Four Weeks
The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.
The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.
A Longer Look Back
Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX, Hang Seng) is readily apparent, especially the SENSEX, but the trend over the past two years has not been their friend (make that three years for the Shanghai).
Check back next weekend for a new update.