World Markets Weekend Review: China And Japan Surge, India Plunges

by: Doug Short

At Friday's close, three of the Asia-Pacific indexes on my watch list were the attention grabbers. China's Shanghai Composite and Japan's Nikkei 255 finished the week in a near dead-heat approaching two percent gains (1.96% and 1.94%, respectively). This was essentially a repeat performance for the Nikkei, the previous week's top performer with a 1.90% advance. But it was a dramatic reversal for the Shanghai, which resurrected itself from the previous week's 4.86% selloff. At the opposite end of the list, India's SENSEX dropped 2.06%, its fifth consecutive weekly decline. UK's FTSE 100, Germany's DAXK, and Hong Kong's Hang Seng turned in respectable gains in the 0.4% to 0.7% range. The S&P 500 and France's CAC 40 straddled the flatline at 0.17% and -0.17%, respectively.

The Shanghai 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 down 32.03% from its interim high of August 2009. At the other end of the inset, the FTSE 100 is now only 0.26% from its interim high set seven sessions back.

Here is a table highlighting the 2013 year-to-date gains, sorted in that order, along with the 2013 interim highs for the eight indexes. The sustained advance of the Japan's Nikkei puts it solidly in the top spot. India's SENSEX is the sole index with a YTD loss.

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).

Check back next week for a new update.

Note from dshort: I track Germany's DAXK a price-only index, instead of the more familiar DAX index (which includes dividends), for constency with the other indexes, which do not include dividends.