By Lachman Balani
TORONTO: Many major stock markets like the US, Japan, France, Germany and UK are all up in the first half of the year that ended on the last trading day Jun 28, 2013.
The stock markets of these countries have been pulling ahead despite slow recovery of their economies, fiscal problems and slow gross domestic product (GDP) growth.
The reason for their rise is attributed mainly due to austerity measures and quantitative easing or printing of money by the government, though in the case of the better than expected upward push of the US indices, the reasons are also improvements in its housing market and good profits and high cash balances of its companies.
The unexpected super rise in the Nikkei(Japanese stock market) is on account of Abenomics (named after current prime minister of Japan –Shinzo Abe) which is printing huge quantities of money and ploughing it into the economy.
On the flip side, we have economies like the BRIC (Brazil, Russia, India and China) countries, which have higher annual GDP growth than the developed countries but their annual rate of growth has slowed significantly leading to a fall in the indices of their stock markets, with Brazil being hit the hardest by losing 22.14% and closing even below its 2011 level!
Russia’s MICEX also ended the half-year mark below its 2011 closing losing 10% of its value so far this year. Shanghai and Hong Kong have also lost so far.
Canada’s TSX which is resource (oil and gas) and materials (gold, silver, copper, zinc, nickel etc.) heavy and thus tied to the fortunes of the developing markets such as the BRIC countries also fell in value.
Following is a table of the major bourses of the world showing their rise and fall:
Bourse Dec 31, 2012 Jun 28, 2013 Change % Change
Nikkei (Japan) 10,395.18 13,677.32 +3,282.14 +31.57%
Dow Jones (US) 13,104.14 14,909.60 +1,805.46 +13.78%
Nasdaq (US) 3,019.51 3,403.25 +383.74 + 2.71%
S&P 500 (US) 1,426.19 1,606.28 +180.09 +12.63%
FTSE 100 (UK) 5,897.81 6.215.47 +317.66 +5.39%
DAX (Germany) 7,612.39 7,959.22 +346.83 +4.56%
CAC (France) 3,641.07 3,738.91 +97.84 +2.69%
BSE (India) 19,426.71 19,395.81 -30.90 -0.16%
TSX (Canada) 12,433.53 12,129.11 -296.42 -2.38%
Kospi (South Korea) 1,997.05 1,863.32 -133.73 -6.70%:
Hang Seng (HK) 22,656.92 20,803.29 -1,853.63 -8.18%
MICEX (Russia) 1,479.58 1,330.46 -149.12 -10.08%
Shanghai Composite 2,269.13 1,979.21 -289.92 -12.78%
Bovespa (Brazil) 60,952.08 47,457.13 -13,494.95 -22.14%
It is worth mentioning here that defying all logic of market principles the bourses of Tehran (up more than 40%) and Pakistan(up more than 30%) have seen a tremendous surge in their values this year!
(Lachman Balani is a financial consultant based in Mississauga)