Courtesy of Doug Short.
All eight of the world indexes on my watchlist closed the week with gains, with the Hang Seng as the standout performer — up nearly four percent. The German index, the backbone of the euro zone economy, placed a distant second with a gain of less than half the Hang Seng.
Index behavior over the past week was no doubt mostly driven by euro zone rumors and complex trading strategies in advance of tomorrow’s Greek vote. Greece’s Athens Index, not on our watchlist, surged a whopping 13.71% last week. Now it’s only (ahem) 89.5% off its 2007 peak. This index is a classic illustration of the break-even curve for investors.
The table inset in the chart below shows that five of the eight markets are in bear territory — the traditional designation for a 20% decline from an interim high. Last weekend the BSE SENSEX was also in the land of the bears, but last week’s gain put it fractionally above the -20% barrier. The FTSE 100 sits just below the “correction” level (a decline of 10%). The S&P 500, which was on the correction threshold two weeks ago at -9.94%, has now distanced itself from that designation.
As for YTD performance, here is a table showing the 2012 peak percentage gains, sorted in that order, and current YTD gains for the eight indexes. Despite last week’s gains, the gap between 2012 highs and the YTD performance clearly highlights the worldwide volatility in equities so far this year.
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.
Check back next weekend for a new update.
Note from dshort: At the suggestion of Joerg Willig, a finance professional in Germany, I replaced the DAX index, which includes dividends, with the price-only DAXK, which is consistent with the other indexes.
