World Markets Weekend Review: The Asia-Pacific Surge

by: Doug Short

We saw another strong performance from my focus group of eight world indexes. All finished with gains except for Germany's DAXK, which posted a fractional decline of 0.17%. But the Asia-Pacific four-pack took the top spots, with the China's Shanghai Composite as the standout with a 3.30% gain. India's SENSEX was a distant second with a 1.91% advance. Hong Kong's Hang Seng and Japan's Nikkei both posted 1.45% and 1.03% gains, respectively. France's CAC 40 and the US S&P 500 were in a virtual dead heat for fifth place at 0.96% and 0.95%, respectively. The 1.25% average of the eight indexes returns us to the string of strong weekly gains after last week's pause.

The Shanghai is up 18.23% since its interim low in early December, but it remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. See the table inset (lower right) in the chart below. The index is still down 33.25% from its interim high of August 2009. At the other end of the inset, the S&P 500 and FTSE 100 set interim highs on Friday.

As for the 2013 performances, here is a table highlighting the year-to-date gains, sorted in that order, and the 2013 interim highs for the eight indexes. As we can readily see, 2013 is off to a great start with five of the eight at their YTD highs.

A Closer Look at the Last Four Weeks

The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I've also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.

The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.

A Longer Look Back

Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX, Hang Seng) is readily apparent, especially the SENSEX, but the trend over the past two years has not been their friend (make that three years for the Shanghai).