These are the world’s best and worst performing markets

By Brian Tycangco

A sharp correction in global stock markets like last week's makes it easy to lose perspective. A 5 percent fall might feel like a lot - but in the context of, say, a full year, it's not that much.

And that makes it all the more 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 a total market capitalisation greater than US$100 billion declined last year.

The worst-performing markets (which were still in the positive column) were the United Arab Emirates, Saudi Arabia and Russia - all major oil producers that suffered during a year when oil prices were weak.

As for the 10 best-performing markets, they posted 12-month gains of between 34.8 percent to 52.7 percent. Vietnam, with a soaring economy, recovering real estate market and strong investment inflows from China, was the market to be in last year.

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

Previously strong markets are now among the worst markets

The worst performing market in 2018 so far is Turkey. Its stock market has been caught up in a severe economic downturn, soaring inflation and a falling currency brought about by a macroeconomic crisis, political incompetence and U.S. sanctions.

China is the second-worst performing market this year. We've written previously about how the simmering trade war with the U.S. is hurting its economy and investment climate (here and here) - and, in turn, its stock market.

The Philippines, which performed spectacularly well last year (up 25 percent) is down 23.4 percent in 2018 so far. That's been a result of unchecked inflation and a soaring trade deficit caused by a massive infrastructure spending program.

As for the winners this year…

Three of the worst-performing markets last year (United Arab Emirates, Saudi Arabia and Russia) are now among the world's best-performing markets. Stronger oil prices have a lot to do with this.

The U.S. market is also doing well so far this year. But as we've said before, the longest running bull market in history is likely entering its final stages, given expensive valuations.

All this to say… it pays to be diversified

Earlier this year, we shared (here) about steps you should take to mitigate the risks associated with elevated uncertainty and expensive market valuations.

It boils down to taking four simple steps. First, keep some cash on hand as a hedge for falling markets and a tool to take advantage of undervalued situations. Second, always stick to your stop-loss levels. Third, own some gold as insurance against financial calamity. And lastly, diversify. This involves spreading your wealth across different markets, economies and asset classes.

Remember, today's strong markets may not stay strong for long. And by keeping an eye out for the underperformers - and getting in early - you could benefit as those markets play catch up. A diversified portfolio makes sure you're protected from falling markets - while you can profit from rising ones.

 

Brian Tycangco
Brian Tycangco is an Editor and Investment Analyst with Stansberry Churchouse Research, an independent investment research company based in Singapore and Hong Kong that delivers investment insight on Asia and around the world. He's been working in the financial world since 1995 and has carved out a reputation as "Master Stock Picker". He's seen just about everything there is to see in these markets, met with the leading CEOs of every industry in Asia, and knows the ins and outs of doing business and making money there. Brian has been a stock broker at a large Asian trading house, an equities analyst for a major European investment bank, as well as editor and chief investment strategist for one of the longest-running Asian investment newsletters in the world. Click here to sign up to receive the Asia Wealth Investment Daily in your inbox every day, for free.

Educator Index

Archive

2018
December
September
October
November
October
November
October
September
August
July
June
May
April
March
February
January
2017
October
September
August
July
June
May
April
March
February
January