Financial success for international professionals

Market Snapshot - September 2016

· by Roy Walker · Read in about 4 min · (723 Words)

Right now the Dow Jones Global index (representing 95% of listed equities worldwide) is at exactly the same level as at the beginning of 2015. It’s helpful to break that apart into three segments - North America, other developed markets, and emerging markets.

In USA, as the Federal Reserve continues to shy away from raising interest rates, valuations are stretched as investors hunt for returns. Equities have driven higher, extending the rebound from earlier in the year.

Of course the dollar doesn’t need a leg-up from a rates hike, and since mid-2014 already stands 18% higher against the Euro, 25% higher against the pound Sterling, and 23% higher against the Aussie dollar. A rise in US interest rates is ultimately inevitable, as is the net-negative impact on many parts of the global economy that will ensue.

So in spite of nice looking growth in the FTSE100 and ASX200, in US dollar terms both the UK and Australia have let the developed market team down, and the USA is almost solely responsible for any developed market equity gains in at least the last 12 months.

On the other hand, several emerging markets continue to do well in 2016, in part because the delay in the Fed raising rates has been good for risk assets. There is also the theme that emerging markets are possibly becoming less correlated (with developed markets) as they move away from dependance on exports and commodities and towards infrastructure and consumer driven growth.

Major stock index performances as at September 2016

Charts of all the above indices follow below.

Dow Jones Global Index - World Developed Markets

The Dow Jones Global Index is a capitalisation weighted index covering 95 percent of global capitalisation across 48 countries (25 developed markets and 23 emerging markets).

Dow Jones Global Index

MSCI EAFE (Europe Australia Far East) - World Developed Exc.USA

One of the most common benchmarks to measure international equity performance outside of North America (USA & Canada). EAFE covers large and mid-cap equity in 21 developed market countries in Europe, Australia and Southeast Asia.


MSCI Emerging Markets - Global Emerging Markets

The MSCI Emerging Markets Index captures large and mid cap representation across 23 Emerging Markets (EM) countries. With over 830 constituents, the index covers approximately 85% of the free float-adjusted market capitalisation in each country.


S&P 500 - USA

The Standard & Poors 500 Index is a market capitalisation index of 500 of the largest North American companies (chosen by committee) listed on the NYSE and NASDAQ exchanges, together totalling about 80% of the available market, hence representing about a third of total market capitalisation globally.


Nikkei 225 - Japan

The ‘Nikkei’ price-weighted average is the most common benchmark of Tokyo listed equity.


STOXX Europe 600 - Europe

STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.


EURO STOXX 50 - Eurozone

A market capitalization-weighted stock index covering 50 of the largest, liquid, blue-chip European companies operating within eurozone nations.


FTSE 100 - UK

Tracks that largest 100 companies listed on the London stock exchange weighted by full value market capitalisation, with a qualifiying threshold of minium 25% free-float for UK incorporated firms. Note that a significant number are international firms which have a minimum 50% free-float requirement.


ASX 200 - Australia

The primary benchmark for Australian stocks, a market-capitalisation weighted index.


HSI 50 - Hong Kong

The Hang Seng Index is a free-float market-capitalisation index that tracks the 50 largest companies listed on the Hong Kong stock exchange, a little over 55% of the available market capitalisation.


STI 30 - Singapore

The FTSE Straits Times Index is a capitalisation-weighted index that tracks the performance of the top 30 companies listed on the Singapore Exchange.


SSEC - China

The Shanghai SE Composite is a weighted composite index of all stocks (A-shares and B-shares) traded on the Shanghai Stock Exchange.


BSE 30 - India

The Sensex 30 covers about 45% of the free-float market capitalisation of the BSE exchange (around 4700 firms; of which a sizeable number are illiquid).


BSVP - Brazil

A total return/accumulation index tracking about 50 stocks representing about 70% of market capitalisation on the Sao Paulo exchange.


RTSI - Russia