By Lachman Balani
TORONTO: In 2008, the US practically brought the world economy down to its knees because of reckless mortgage loans (known as NINJA loans extended to people who had No Income No Job or Assets), collateralized debt obligations (CDOs), Special Investment Vehicles (SIVs) and other fancy investment vehicles that the top rating agencies such as Moody’s, S&P and Fitch gave AAA standings even though they were sub-par investments.
The world at large was making fun of the developed world predicting the doom of the European Union and the Euro zone (even the US and Canada joined in the fray) and the decline of the US economy, claiming the time was up for the west and it was up to the rest to revive the world economy.
China, India and other smaller economies in the Far East like Indonesia and South Korea harkened to the call and did do their bit in the beginning, however it wasn’t enough.
It is the resiliency and determination of the US who with some creative monetary and fiscal policies and the steely resolve of the European Union backed by Germany and France that really saved the day in the long run, so much so, that instead of the breakup of the Eurozone, an 18th country, Latvia, just joined the now coveted Eurozone on Jan 1, 2014.
In the land of the rising sun, Shinzo Abe, current prime minister of former Godzilla Japan, whose electronic, car brands and other consumer durables still dominate the world market put into gear his Abenomics that has resulted in Japan’s Nikkei spiking up 56.7% resulting in the best performing stock market of the developed world in 2013!
Following in its footsteps are the markets of the US; Nasdaq up an impressive 38.3%, S&P500 up 29.6% and the Dow Jones bringing up the rear with a 26.5% gain. All three indices have cracked their previous all-time highs to post new records in 2013!
In Europe the best performing stock market that is followed closely is Germany with a 25.5% gain which has also attained a new all-time high in 2013!
India’s Bombay Stock Exchange (BSE), which also set a new record in 2013, had a modest gain of 8.8%, while Brazil of the BRIC (Brazil, Russia, India, India) countries was the worst performing- down 15.5%. The fastest growing economy in the world, China, had modest gains on its Hong Kong stock exchange of 2.9%, while the Shanghai Composite lost 6.8%. Russia’s MICEX gained an infinitesimal 1.7%.
At home, the Toronto Stock exchange posted a 9.6% gain.
Below is a table of how major stock markets around the globe performed. The date of close is given as Dec 31, 2013 even though for some markets the last trading day was Dec 30, 2013.
Bourse Dec 31, 2013 close Dec 31, 2012 close % change
Nikkei (Japan) 16,291.31 10,395.18 +56.72%
Nasdaq (US) 4,176.59 3,019.51 +38.32%
S&P500 (US) 1,848.36 1,426.19 +29.60%
Dow Jones (US) 16,576.66 13,104.14 +26.50%
TSX (Canada) 13,621.55 12,433.53 +9.55%
DAX (Germany) 9,552.16 7.612.39 +25.48%
CAC (France) 4,295.95 3,641.07 +17.99%
FTSE (UK) 6,749.09 5,897.81 +14.43%
BSE (India) 21,140.48 19,426.71 +8.82%
Bovespa (Brazil) 51,507.16 60,952.08 -15.50%
MICEX (Russia) 1,504.08 1.479.58 +1.68%
Shanghai Composite 2,115.98 2,269.13 -6.79%
Hang Seng (Hong Kong) 23,306.09 22.656.92 +2.87%
Kospi (South Korea) 2,011.34 1,997.05 +0.71%
It is worth mentioning here, even though the values are not given, that certain markets like Pakistan, Iran and Venezuela have defied fundamental and technical logic and have posted extremely high gains with Venezuela gaining 450%!
Other markets not shown are Iceland, Ireland and Greece which were in tethers a couple of years ago but have come back nicely with gains of more than 30% on their respective bourses.
New emerging economies which are being followed are Nigeria, Zambia and Argentina- all of which have also gained more than 30%.
(Lachman Balani is a financial and mortgage consultant)