Courtesy of Doug Short.
The rally resumed for the indexes on my world watchlist after five weeks of predominant losses. China’s Shanghai Composite was the sole outlier with a grim 4.52% selloff for the week. The big winner, for the second consecutive week, was Japan’s Nikkei, up 3.38%, just nosing out India’s SENSEX, which rose 3.31%. Three other indexes finished with two-percent-plus gains. The S&P 500 posted the weakest gain at 0.87%.
What’s especially remarkable about the Nikkei is its rampant volatility since it closing high on May 22th. In the 27 session since that interim high, the Nikkei has had a 2.31% average day-over-day price change. eight have been over 3% and four over 4%. The three largest, not surprisingly, have been declines: 7.32%, 6.35% and 5.15%.
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 a gut wrenching 42.99% from its interim high of August 2009. The S&P 500 remains closest to its interim high (which is also its all-time high) with a gap of 3.77%. The DAXK is in second at 7.04% off its high with the SENSEX close behind at 7.66%.
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 to its interim high on May 22, followed by a sudden and dramatic selloff and partial recovery with rabid volatility.
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 31.57.27% YTD gain, but off its 2013 peak gain of 50.33%. The other three Asian indexes have negative YTD performances, although the SENSEX is down by only a factional percent. Germany’s DAXK was in the shallow red last week, but has moved back into the green.
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) 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 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.
