Friday, 19 October 2018

The world's best and worst performing markets 2017-2018

Source: Stansberry Churchouse Research

A sharp correction in global stock markets of 5% like last week’s makes it important to step back and take stock of where markets have been in recent months… starting with last year.

In 2017, it was hard to find a market that did poorly

No stock market with total market cap greater than US$100 billion declined last year.

→ The worst performing markets (still in positive columns), United Arab Emirates, Saudi Arabia and Russia, were all major oil producers that suffered as the oil prices were weak.

→ The best performing markets, Vietnam, Austria, Poland, posted gains of over 50%.
  • Vietnam with its soaring economy, recovering real estate market and strong investment inflows from China, was the market to be in last year.

In 2018, previously strong markets are now among the worst markets

So far in 2018, the picture for best- and worst-performing markets is completely different.

The worst performing markets:
  • Turkey is the worst performer so far, having caught up in severe economic downturn, soaring inflation, and a falling currency brought about by a macroeconomic crisis, political incompetence and US sanctions.
  • China is the 2nd worst performing market, resulting from the shimmering trade war with the US hurting its economy and its stock market.
  • The Philippines has gone from up 25% last year to down 23.4% in 2018 so far. That’s a result of unchecked inflation and a soaring trade deficit caused by a massive infrastructure spending program (importing most of the raw material).

The best performing markets:
  • With stronger oil prices, 3 of the worst-performers last year (United Arab Emirates, Saudi Arabia and Russia) are now the world’s best-performing markets.
  • US market is doing well so far but the longest running bull market in history is likely entering its final stages, given the expensive valuations.

In Conclusion
We believe, it all boils down to taking the 4 simple steps:
→ Keep some cash on hand to hedge for falling markets and to take advantage of undervalued situations.
→ Own some gold as insurance against financial calamity.
→ Diversify: spread your wealth across different markets, economies and asset classes.
→ Look at other alternative investments not correlated to the equity markets.

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