As the year progresses well into its second quarter and contemplations for a possible summer rotation in portfolios arise, it is time to examine how the world's stock markets have performed so far in 2013 and during April to see what the trends are likely going to look like in the near future months.
All data is calculated year-to-date (YTD) as of the May 1 closing price, based on aggregate price values of all available exchange traded funds (ETFs) focused on the given country, using ETFDB.com. The ETF proxy for the country is listed, although please note that its performance may slightly vary from the calculation as the total computation is broader and includes performance of all ETFs available that focus on the particular country, not just the one narrow proxy ETF.
Let's have a look at YTD results first to see which countries have fared well this year so far. April performance is listed in the second column of numbers to give us an idea of whether the trend is still strong and likely to continue or if it is already fading.
Top 10 countries YTD
|Ireland (NYSEARCA:EIRL)||14.99%||1.74%||Slowing down|
|Thailand (NYSEARCA:THD)||11.80%||2.14%||Slowing down|
|United States (NYSEARCA:SPY)||9.33%||1.51%||Slowing down|
|Switzerland (NYSEARCA:EWL)||8.98%||2.03%||Slowing down|
|Sweden (NYSEARCA:EWD)||7.39%||0.39%||Slowing down|
|New Zealand (NYSEARCA:ENZL)||6.70%||3.96%||Accelerating|
From the above recap we can clearly see that 2013's strongest performers have been Japan, Ireland and Thailand, followed by Israel, the United States and Switzerland. The uptrend remains strong and is likely to continue in May in Japan (although it is slowing down), Israel, Portugal, Australia, and New Zealand. The positive trend is currently fading in the rest of the top 10 performing countries, Ireland, Thailand, United States, Switzerland and Sweden.
Worst 10 countries YTD
|South Africa (NYSEARCA:EZA)||-11.09%||-0.60%||Slowing down|
|EU countries (NYSEARCA:FEZ)||-0.20%||2.72%||Reversing|
As we can see from the above calculations, there are only eight countries where stock market returns have been negative year to date. This signals a very strong and broad positive performance of the world markets. However, if we treat the EU as separate countries, the picture doesn't look so rosy any longer as markets of those 27 countries as a whole are still slightly in a negative territory in 2013.
The worst performers have been Canada, South Africa, Russia, China, Chile, India, and Brazil. Most of these countries are strongly dependent on either natural resources or manufacturing exports or both. Market performance in the EU countries as one group seems to have stabilized in 2013.
The fall in Canada is still accelerating, as well as in Russia and Chile, whereas other markets seem to be stabilizing. Some, such as China, India, Italy and Austria seem to be strongly reversing the negative market performance and might become compelling turnaround stories in the upcoming months.
Let's now have a look at best and worst performers just in the month of April to see the strongest recent trends and anticipate where the strength might continue and where it is likely to fade. One-week performance is shown in the second column of numbers to give us an idea of the most recent strength of the trend.
Top ten countries in April
|Country||April||1 week||Trend strength|
|Spain (NYSEARCA:EWP)||6.01%||1.39%||Slowing down|
The strong rally in Japan seems to be fading, similar to slowing market performance of Italy and Spain. On the other hand, we witness an accelerating uptrend in many other countries, notably Portugal, India, Taiwan, Austria, France, Malaysia and New Zealand.
Worst ten countries in April
|Country||April||1 week||Trend strength|
|Hong Kong (NYSEARCA:EWH)||1.07%||0.2%||Slowing down|
|United States||1.08%||0.16%||Slowing down|
The United States has just made the list of top-10 worst performers in April. However, the U.S. markets were still gainers, although by just around 1%. The trend in the last five trading sessions is not very encouraging, though. The bulls seem to be taking a break. This could be connected to the summer sector rotation and Sell in May thoughts and actions, among other influences.
Canada seems to be slowing or outright stopping its slide. Most other worst April performers also seem to be reversing the current negative trend.
The strong rally in Japan, instigated mainly by Bank of Japan QE, seems to be slowing down considerably. On the other end of the spectrum, Canada's rapid April slide is slowing down substantially. The U.S. is taking a pause and hovering on 1% gain in April.
China and India in particular are reversing a downward trend and could emerge as strong performers in the upcoming months. A relief rally in the EU is currently under way. But is it sustainable?
For investors who diversify internationally, emerging markets such as Taiwan, Malaysia and India are good candidates in a relatively strong and accelerating uptrend. China is a question mark, although the downtrend seems to have stopped. I would steer clear of the EU markets for now despite the tempting April rally. Though the uptrend could continue for a few more weeks or months, investors in Europe must be extra vigilant for any signs of renewed stress in the markets, which could be caused by many factors, among them debt and banking troubles in countries such as Slovenia or the upcoming German elections in September.
The U.S. market is currently on a spring break. Taking some profits off the table is never a bad idea, although I prefer long-term investing and would rather consider selling some out of money covered calls on your portfolio holdings for the next six months instead of outright selling parts of your positions. Additionally, there are many other good alternatives for how to hedge your portfolio in the current market weakness without having to sell.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.