Not All Stock Markets Are Created Equal

Not All Stock Markets Are Created Equal




by The Short Side of Long

Chart 1: Recently India has outperformed & Russia has under-performed

Global Stock Markets 1 Year Performance 

Source: Stock Charts (edited by Short Side of Long)

Not all stock markets are created equal. It is very easy to just summarise the stock market conditions as extremely bullish and posting record highs, but this is only really true for the United States. This posts looks at some of the major stock markets of the world, priced in US Dollars and adjusted for dividends (total return). You will notice that over the last five years, there is a very theme reoccurring here.

Over the last 12 months, Developed Market equities like US and Germany have outperformed pretty much just about any other stock market in the world, with the exception of India. However, it is true that European equities as well as the broad economy is now being affected by the turmoil in Ukraine. The main loser and under-performer has been the Russian stock market and it is the only major global stock market that is down over the last year.

Chart 2: US is the best performer over 3 years, while Russia the worst!

Global Stock Markets 3 Year Performance 

Source: Stock Charts (edited by Short Side of Long)

The story doesn’t change much when we observe the 3 year rolling performance, including dividends. Essentially, once again e have US and Germany outperforming the whole world and to be quite honest, by a handsome margin too.  On the other hand, Brazilian and Russian equities have been the worst performers and stand out like a sore thumb. Consider the fact that while S&P 500 is up almost 80% over the last three years, Brazilian is down 10% and Russian down 20% in the same time period. Somewhere along the way, we also saw the other two BRICs (China & India) not do so well, however recent rallies have now changed that, with both countries up around 25%.

Finally, we look at the winners and losers over the last 5 years. The theme I’ve discussed through the short and brief article continues, with Developed Market equities outperformance. Once again, the US stock market takes the cake with a staggering outperformance against all of its major peers. Emerging Markets like the BRICs have been serious laggards, apart from India which has performed vert well since the elections late last year. Chinese, Brazilian and Russian stocks remain basically flat over half a decade (up only several percentage points really).

Chart 3: BRICs have under-performed US equites over the last 5 years

Global Stock Markets 5 Year Performance 

Source: Stock Charts (edited by Short Side of Long)

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