Courtesy of Doug Short.
The worldwide rally remains on a roll. All eight indexes on my watchlist posted substantial gains with Japan topping the list with a stunning 6.67% advance … and that was in holiday-shortened four days of trading. In fact the East dominated the action, with the four Asia Pacific indexes taking the top four spots. Even the worst performing CAC 40 posted a tad over one percent.
The Shanghai remains the only index on the watch list in bear territory — the traditional designation for a 20% decline from an interim high. See the table inset (lower right) in the chart below. The index is down over 35% from its interim high of August 2009. At the other end of the inset — three of indexes, the ones for Germany, the UK, and Japan — set new interim highs on Friday, and the US’s S&P 500 set another new all-time high.
Here is a closer look at the YTD performance, which, more than anything, illustrates the power of Abenomics to levitate the Land of the Rising Sun. And speaking of the sun, I hope the future doesn’t trigger an allusion to a Japanese version of the myth of Icarus.
Here is a table highlighting the 2013 year-to-date gains, sorted in that order, along with the 2013 interim highs for the eight indexes. The strong performance of the Japan’s Nikkei over the past few months puts it solidly in the top spot with a 40.52% YTD gain. While the Nikkei is the top performer, its three Asia-Pacific neighbors, India’s SENSEX, Hong Kong’s Hang Seng and China’s Shanghai Composite, have performed the worst in 2013, although only the Shanghai is in the red YTD.
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 week for a new update.
Note from dshort: I track Germany’s DAXK a price-only index, instead of the more familiar DAX index (which includes dividends), for constency with the other indexes, which do not include dividends.
