World Markets Weekend Update: A Wild Spread
Doug Short | Aug 03, 2014 12:58AM ET
Three of the eight indexes on my world markets watch list posted gains for the week, with China and Japan taking the honors. The Shanghai Composite rose 2.76%, with the Hang Seng in distant second with a 1.31% advance, and the Nikkei a more distant third with a modest 0.42% gain.
The losers were the real attention grabbers, with the best of worst FTSE 100 down 1.65% and Germany's DAXK down a whopping 4.5%
Despite its back-to-back multi-percent weekly gains, the Shanghai Composite remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. The index is down 37.05% from its August 2009 peak. See the table inset (lower right) in the chart below . Hong Kong's Hang Seng is now only 1.73% off its post-recession interim high.
Here is a look at 2014 so far.
Here is a table highlighting the year-to-date index performance, sorted from high to low, along with the 2014 interim highs for the eight indexes. At this point, four of the eight are positive YTD, down from six last week, with France's CAC 40 and the UK's FTSE 100 dropping into the red.
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.
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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 and Hang Seng) up to their 2007 peaks is evident, and the SENSEX remains by far the top performer. The Shanghai, in contrast, formed a perfect Eiffel Tower from late 2006 to late 2009.
Check back next week for a new update.
Note from dshort: I track Germany's DAX index (which includes dividends), for constency with the other indexes, which do not include dividends.
All the indexes are calculated in their local currencies.
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