2006 Global Returns

world markets
Via MarketBeat, here are Global Returns for 2006: 

Index Change
China 107.02%
Russia 51.01%
India 49.11%
Brazil 39.50%
Mexico 37.62%
Hong Kong 34.45%
Germany 32.59%
France 30.95%
U.K. 26.52%
Australia 25.73%
South Africa 18.17%
Taiwan 14.54%
USA 13.86%
Japan 5.17%
Israel -6.36%
Turkey -10.54%

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David Gaffen observes that "the past 12 months presented a good time to buy a passport for your portfolio:

"As good as the returns were in the  U.S., they didn’t hold a candle to emerging markets and overseas returns. The table at right showed the strength of overseas markets, from BRICs to France to U.K.

The big inflows had some strategists (not us!) thinking investors moved
into the emerging markets at exactly the wrong time: World equity
funds had inflows of $104.61 billion in 2005, compared with $31.19
billion for domestic equity funds (ICI).

The 1st four months of 2006 were the biggest for domestic inflows — at least
$18.32 billion per.

Since then, a curious stat developed:  a majority of fund managers polled by Merrill Lynch
believe global stocks will be higher in a year’s time, and the greatest
number thinks that if one market is overvalued, it’s the U.S. market.

Are emerging markets maturing? Or is this merely a testament to the global glut of liquidity?

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Source:
2006 Revisited: Spanning the Globe
David Gaffen
WSJ Marketbeat, December 29, 2006, 4:36 pm
http://blogs.wsj.com/marketbeat/2006/12/29/2006-revisited-spanning-the-globe/

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

36 Responses to “2006 Global Returns”

  1. Macro Man says:

    Well, judging by the top 4, it looks like it simply reflects a flow of funds into BRIC strategies. Clearly some of this is reflective of the same excess liquidity that has driven bond yields so low.

    Last year was the first year since 2002, however, that China outperformed the US market (A-share index versus S&P 500.)

    china usa
    2006 1.307377049 0.136217949
    2005 -0.082706767 0.030553262
    2004 -0.152326322 0.090009001
    2003 0.105708245 0.263936291
    2002 -0.17114486 -0.234320557

    And as the unfortunate holders of Turkish equities discovered, if you ever do have a legitimate crisis, it takes a bit longer than three months to bounce back!

  2. BDG123 says:

    Bubble. Have you actually looked at a chart for Russia or China over the last three months? Looks like a moon shot.

  3. Bill a.k.a. NO DooDahs! says:

    You say “(not us!)” and in reviewing the article, the “(not us!)” doesn’t appear. I take that to mean that YOU, or Ritholtz Capital, thought that emerging markets made a good play at some point in 2006.

    Did you ever express that position in your blog, sir?

    If so, please direct your readers to a post or link where you DID express that opinion.

    If not, why are you now crowing “(not us!)” – it’s unverifiable.

    What is your current opinion of the tradeability of the foreign markets? I can read MarketBeat via MarketBeat, it would be nice if you could add value to the conversation.

    FWIW – at the moment I’m bullish on China and Mexico, the Wifeykins has the ETFs in her IRA (with trailing stop loss orders), but I am not trading the ETFs in my account. I have one China stock that I am long (and wrote about) and two others on the watchlist. I have no opinion or position on other foreign markets.

    ~~~

    BR: That’s not me speaking, its the quote from Marketbeat — the indents didn’t show up due to the table –

    I’ll try to fix it now . . .

    ~~~~

    OK, thats fixed

  4. Macro Man says:

    The thing with Russia is that the bubble is five years old. The RTE$ index, which is what most foreigners play, was up 81% in 2001, 38% in 2002, 58% in 2003, paused for breath with 8% in 2004, then 83% in 2005 and 71% in 2006. The index has gone from 143 at the end of 2000 to 1921 at the end of last week.

  5. M.Z. Forrest says:

    <Insert obligatory post trashing Barry>

    Barry,
    I am a long time reader of the site. I read your site hourly. I read it aloud to my 6 month old baby so that he may glean your wisdom. I even purchased software so that the site could be read to me in my sleep.

    Why didn’t you tell me to invest in China? I was sitting all in cash, because you told me. If I would have invested in China, my wife wouldn’t have to walk the streets to pay our bills and my other children wouldn’t have to be begging at street corners.

    Love the site Barry.
    <End obligatory post trashing Barry> ;-)

    If you are going to do one of these posts, you might as well do them right!

  6. MarkM says:

    Good lord, go away DooDahDay! You are becoming quite the bore. You have your own blog. Put your thoughts/ramblings/crazed mutterings there for chrissakes. Don’t come into Barry’s blog, pee on the rug and crow about how smart you are. Didn’t your mother teach you anything?

  7. BDG123 says:

    Of course the bubble is five years old. It is based on the commodity bubble/weak dollar which is five years old.

    I didn’t say bubbles weren’t profitable. The Nasdaq bubble was five years old when it popped too.

    I’m just saying it’s a bubble.

  8. pete says:

    I’m curious to know what these Indexes are composed of?

    Are these actual Index funds that can be purchased through a financial provider?

    I ask because i am having difficulty finding Index funds associated with foreign markets.

  9. BDG123 says:

    Hey Bill, Have you ever been out of your bedroom?

  10. wunsacon says:

    Folks,

    If you appreciate Barry’s independent streak, then I do not see why you would want “Bill a.k.a. NO DooDahs!” to either “agree or shut up”.

    I’ll continue reading Barry’s blog. But, despite my respect for Barry’s thinking (or perhaps because of it), my opinion is: “Bill a.k.a. NO DooDahs!” asks some reasonable questions in a not-too-impolite manner.

    -wunsacon

  11. dryfly says:

    Are emerging markets maturing? Or is this merely a testament to the global glut of liquidity?

    How about some of both?

    Emerging markets are clearly more ‘mature’ than a few years ago (maybe not so mature as to be fully ‘stress tested’ yet though – that will be the full test)… but regardless, the recent performance is liquidity driven (bubble).

  12. jmunnie says:

    Pete, check out Vanguard. They have several foreign index funds, including an emerging markets index fund.

  13. S says:

    I checked some of the stats of the Templeton Russia Fund (ticker: TRF) on http://www.etfconnect.com. I expected it to be extremely heavily weighted in commodities/resources, but was surprised to see it is pretty well balanced among various industries and still put up a 60%+ return in 2006. As BDG123 pointed out, it was up about 30% in the last quarter of the year.

    Anyway, does anyone have any insight why it trades at such a huge premium to NAV (currently around 38%)? I looked at a handful of other country specific ETFs and most trade closer to a 1% discount/premium to NAV.

  14. Fred says:

    This emerging market action is what most bears are missing. Flat world. Get used to it, change WITH it, profit with it, but DO NOT FIGHT IT!!!

    Memo to Congress…Don’t fight global trade!!!

  15. Fred says:

    Barry,

    Any comments on today’s soft landing numbers?

    ISM > 50, employment higher than last month, prices paid fell hard, and new orders spiked.

    Spinsters?

  16. Leisa says:

    In so far as my limited understanding goes, I don’t recall that Barry makes any specific comments about trades in this FREE blog. So, the confrontation in Bill’s post came off as just that, confrontational.

  17. BDG123 says:

    I thought we all agreed the world wasn’t flat half a millenium ago. I guess there are those who never took science in school.

    The world is NOT flat. In fact, there is significant proof the knowledge ecnomies are accelerating the gap against emerging markets. While China’s economy attempts to solve overpopulation, feed its people, build roads and put people into a house with plumbing and electricity, the U.S., Japan and Europe are advancing the future of biotechnology, green technology, software, basic research and technology. I’m not going to type a book but even Friedman has since admitted he might be a little too bearish on the western world.

    Don’t confuse elevated commodities producing temporary profits and unsustainable wealth in emerging markets with economic brilliance or reform. Ditto with outsourcing to China. The vast majority of profits and exports in China are from western companies. Mostly American, but all western companies lead in process and technology innovation. The China movement is simply another innovation by western companies. It also has a side benefit of goodwill and opportunity in China. It isn’t China taking over the world, it’s American companies expanding their innovative strategies.

    The world is NOT flat. Nor will it ever be. As manufacturing becomes more an more driven by automation as it has for a century, it will move back to the U.S. when the people intensiveness is reduced to a nonsignificant level, manufacturing will be located in the markets where the consumers exist for multi-nationals. At 20 man hours per car, that is why Honda and Toyota keep opening auto plants in the U.S. It’s a trivial number comparatively.

    The U.S. still manufactures 27% of all global output and that ain’t gonna change.

  18. someguy says:

    Off topic: can someone tell me why the oil futures are always in contango ?

    Here it is the beginning of January. We have plenty of oil. The February futures price just fell by over $2.50 a barrel. And yet the March and April spreads versus Feb are $1 and $2 a barrel ! Why ?

    I say we are going to break below $50 a barrel in the spring and if there isn’t some serious consumption or a disruption, we aren’t going to see $60 anymore.

    Its getting harder and harder to believe the world is running out of oil when OPEC has to cut more and more.

  19. Fred says:

    “The world is NOT flat. In fact, there is significant proof the knowledge ecnomies are accelerating the gap against emerging markets.”

    Rather than ranting incoherant “facts”, like above, kindly provide a link that shows emerging economies are “accelerating the gap against emerging markets”. The growth rates aren’t even close.

    If you’re too narrow minded to “see” the huge emergence of new consumers from these regions, you should stick to T-bills.

  20. BDG123 says:

    Historically, when OPEC is cutting, prices are weak at best or tank at worst. The problem with cutting is also exacerbated by the cheaters. ie, OPEC members aren’t very good at abiding by what they say. It’s pretty hard to cut production when that is the major source of revenue for your economy. So, historically, many say they are cutting while they continue pumping at a frenetic pace. End result? Even more excess oil.

    Oil is not a good long trade here unless we have a miraculous economic recovery in our grasp. The oil companies are incented to build inventories because they are able to profit paper money with the market in contango. That will likely add to the glut. The oil stocks are not performing well either sans the majors which are considered defensive or megacaps so they’ve disconnected with other energy stocks. Oil stocks lead oil prices. Oil execs were dumping massive share amounts pre the oil cratering in 2006.

    If the Fed remains vigilant, oil ist kaput. Gotta run. Glad I could spam the board today. lol

  21. BDG123 says:

    Now why do I need to provide a link Fred? Because you think someone else is an expert on the topic and I am just bloviating? Now, for you to use the word rant, you’ve obviously been to my blog. Now, don’t be coming over there any more. I’m just ranting.

    Do a search on Barry’s blog and you’ll see a link I provided a loooong time ago. But, since I used to work in R&D, I suspect my opinion as is close to expert as anyone on this board. Because…….what is an expert anyway?

  22. Fred says:

    Let me get this straight (again)…are you suggesting the emerging economies are expanding LESS fast than mature economies?

    “In fact, there is significant proof the knowledge ecnomies are accelerating the gap against emerging markets.”

  23. BDG123 says:

    Fred, I have to leave for the day but where do you read the U.S is growing faster than emerging markets in that statement? KNOWLEDGE. We are expanding our technology gap and innovation gap.

    Cheers

  24. Richard says:

    And here I thought my 12% blended annual returns were good.

  25. Teddy says:

    Actually, Barry was very positive about EWM about 6 months ago. But then again, it was ONLY UP 30% SINCE THEN. As far what is going on today, I would like to know what the TERMS OF ENDEARMENT MEANS FOR THE US before I want to say yippee.

    ~~~

    BR Actually, EWJ was rec’d on Power Lunch in 2004

    If I can rip the video, I’ll youtube it . . .

  26. Bill aka NO DooDahs! says:

    @ Teddy – show a link. One link, from 5-7 months ago, where Barry spoke positively about EWM. Shouldn’t be hard for you to do. And please, no link where he talks about the past returns for EWN and then says some non-committal carp like “Are emerging markets maturing? Or is this merely a testament to the global glut of liquidity?” but a real, outright, bullish statement about EWM. Something unambiguous.

    @ someguy – oil futures are not always in contango. If you go back twelve years (the limit of the free data I have) you will see that oil has sometimes been in contango and sometimes in backwardation.

    Gold and natural gas have had more contango over that time period. Holding paper on gold ate over half the profits of the spot move since 1995.

    @ BDG123 – I accept that you’re the closest thing to an expert on what your opinion is. I’m an expert on my opinion. There are no experts on the market, just profitable, more profitable, and unprofitable.

  27. Teddy says:

    Hi Bill aka……..I don’t have a link, but am relying on my photostatic memory, a term coined by a real estate agent as she was boasting to me about herself a long, long time ago.

  28. My1ambition says:

    Barry,

    How are P/E ratios doing?

  29. ECONOMISTA NON GRATA says:

    OT: I’m wondering if today will be remembered as the day that Henry Paulson came up a nickle short…

    Oh well… Anybody want to lend him one…?

    Econolicious

  30. someguy says:

    So why is oil in contango now ?

  31. Teddy says:

    The Big Picture May 4, 2006, EWM basing, breaking out

  32. Bill aka NO DooDahs! says:

    Same reason anything gets in contango – speculators and hedgers believe the price in the future will be higher than it is now.

    If it doesn’t meet their expectations, then the contract will revert to spot as expiry approaches and there will be a negative cost of carry.

    After enough negative carry, eventually they’ll give up and it’ll swing back.

    Gold pretty much stays in contango because of the bugs – once everyone that was alive in 1980 passes on, it might slip into backwardation again.

    I have NO idea about natural gas.

  33. Bill aka NO DooDahs! says:

    Hey, holy schnikes! I’ll add that to his years-ago telecom call, making that two sector bull calls I’m aware of!

    If anyone can find a bull call on the overall market, let me know …

  34. william says:

    Case in point Fred -The Chinese market is bigger and more mature than is the case in Nigeria. However, the market in China is more competitive and its customers are more demanding. What U.S. firms sell to American consumers might have been attractive to Chinese customers a decade ago, but they can’t assume that strategy will still be successful.

    &nbsp

  35. The Wolf says:

    Hey there… You got it all wrong about the Israel stats. The market there was UP in 2006! It went up about 13% !

    I see your stats quoted elsewhere and that’s a shame this wasn’t double-checked.

  36. randv says:

    As many of you know the exposure to just one country especially emerging one will one turn into a disaster, I think it is better to take positions in broad based VWO or similar funds. Check out more ETF funds and their BRIC exposure.