Courtesy of Doug Short.
All eight indexes on my world watchlist were down for the week. The top performing S&P 500 fell 1.01% and the gradient of losses was a steady decline to the worst performing Hang Seng, with its 2.81% selloff over its holiday-shortened week. The Nikkei, the biggest loser of the previous three weeks (and I mean BIG: -3.47%, -5.73% and -6.51%), finished in third place last week with a more modest -1.48%.
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 37.72% from its interim high of August 2009. Based on daily closes, the Nikkei slipped into the bear zone on Thursday, but its Friday rally has it now at -18.82% from its interim high. The S&P 500 remains closest to its interim high (which is its all-time high) with a gap of 2.54%. The DAXK is second closest at 5.09% off its interim high.
Here is a closer look at the YTD performance, which illustrates the power of Abenomics to levitate the Land of the Rising Sun to its interim high on May 22, followed by a sudden and dramatic selloff. I continue to wonder if central banks will see this is a warning that massive QE can have unintended consequences.
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, despite its big correction, puts it solidly in the top spot with a 22.04% YTD gain (but a whopping 18.82% off its 2013 high). The China duet, the Hang Seng and Shanghai indexes was joined this week by India’s SENSEX to make a trio with YTD losses.
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.
