While it was the coldest April in 24 years in Ireland, it was a seriously hot month for global stockmarkets as investors continued to add risk to their portfolios. Investors chose to ignore the Greek bailout and the failure of Italy to form a government. Accommodative monetary policies led the MSCI World 2.9% higher over the month, outperforming global government bonds. Developed market equities outperformed emerging market equities. The US stockmarket continued its strong upward trajectory. Year-to-date the S&P 500 Index is up over 14%.** With over 50% of US companies having reported first quarter earnings, more than 75% have beaten analysts’ estimates. ***
The Nikkei is the world’s best performing stockmarket this year rising by 34%.* Incidentally, it has also witnessed a 100% rise since the market lows in March 2009.* Driving this stellar performance is Japan’s dramatic monetary policy. The BoJ plans to double Japan’s monetary base over the next two years, equating to ¥60-70 trillion in bond purchases a year.
Driven by weaker economic data, emerging market equities have underperformed this year. Interestingly, the four BRIC economies, Brazil, Russia, India and China failed to make the top 40 best performing stockmarkets this year.* The Chinese economy expanded by 7.7% year on year, lower than the 8% expected. Higher inflation in Brazil forced an earlier-than-expected interest rate rise. Despite their near-term weakness, the longer-term fundamentals for emerging markets are solid given their increasing share of global economic growth and better demographics.
The top five performing stockmarkets year-to-date are:
- Japan: +35%
- United Arab Emirates: +28%
- Argentina: + 27%
- Kuwait: +23%
- Philippines: +20%
Ireland is the 12th best performing stockmarket with a return of 15% to 24 April 2013.
*Source: CNN Money. Performance to 24 April 2013.
** Source: Bloomberg to 10 May 2013.
*** Source: The FT
