Ranking Global Equity Markets in 2020: NASDAQ Takes The Lead

Friday, January 01, 2021 /01:20 PM by Bukunmi Adejobi, Proshare Research/ Header Image Credit: Pexels

The year 2020 brought a rapid and unpredictable change to global economies and stock markets with an unprecedented health crisis that disrupted markets throughout the year. As the COVID-19 pandemic escalated, the year was characterized by a fall in oil prices and the Russia-Saudi Arabia oil tiff.

Analysts note that the year 2020's 'Coronavirus Crash' was a major market tumble that began on the 20^th February 2020. With several businesses remaining operationally comatose over the period, labour became the whipping boy as companies laid off workers like nine pins. Consequently, there was a sharp reduction in consumption and output, resulting in corporate revenues tanking. During the crash stock prices and stock markets went into freefall; Central Banks globally started quantitative easing ('QE') and governments primed fiscal pumps as they tried to stave of recessions.

The hospitality, Oil and Gas, tourism, transport, Construction/Real Estate, and retail sectors were hardest hit, while some sectors were mildly affected by stock price declines. Sectors that proved to be countercyclical were- technology and software, essential goods, and consumer goods. Technology stocks benefitted from the positive outlook of increased earnings as consumers worked from home, spent their money online as e-commerce platforms saw revenue surge. The decline in government bond yields supported technology stocks as investors considered them as hidden value opportunities or growth stocks expected to increase their earnings over the medium to long-term.

 

At the end of Q2 2020, economies globally started opening up after the Q1 lockdown. Rising fiscal stimulus, lower interest rates, and broader Central Bank interventions added liquidity which propped equity markets up. The global fiscal interventions boosted confidence and supported equity markets in  the US, Europe and Asia.

Emerging markets such as Thailand, Chile, Brazil, and the Philippines were not left out the anti-recession dogfight. These countries too saw their governments go deeper into debt to support economic growth. The impact of COVID-19 on global economic growth differed across markets, but weaknesses of emerging or frontier economies were exposed as fiscal deficit, foreign capital dependence, and contraction of GDP weighed heavily against weaker economies. As countries navigate new paths to recovery, emerging markets seem resolute in reaching points of economic revival.

 

Top Five Performing Stock Markets In The World

 

America (NASDAQ Composite Index and The Breakout Of Tech Stocks In 2020): 42.74%

The NASDAQ is the second-largest stock and securities exchange in the world, behind only the New York Stock Exchange (NYSE), the NASDAQ attracts some of the largest blue-chip companies globally with representatives from high-tech software, hardware computer, and internet service companies such as Apple, Amazon, Microsoft, Intel, Cisco Systems and Netflix present on the Exchange, although other industries have representatives on NASDAQ as well. The NASDAQ Index tends to be more volatile and growth-focused than other Indexes because it has a higher composition of growth-oriented companies.

The tech-heavy NASDAQ topped Proshare's list of gainers in 2020. The industry's biggest players: Amazon, Apple, Facebook, Alphabet, and Microsoft were somewhat well placed to rise to the challenges of the coronavirus pandemic as the virus accelerated digitalization around the world.

For example, Zoom Technologies Inc, the go-to video conferencing platform during the pandemic, so its tsock price go up by +464% from US$68.04 on 31 December 2019 to US$383.88 as of 23 December 2020.

The overall NASDAQ Index closed the year up by +42.74% to 12,807.92 points as of 22 December 2020 from 8,972.6 points recorded on 31 December 2019.

 

America (S&P 500)

America's S&P 500  index closed the year in the green with a growth of  +14.13% from 3,230.78 points as of 31 December 2019 to 3,687.26 points on 22 December 2020. the biggest movers for the S&P were stocks in the Medical Specialties, Information Technology Services, Semiconductors, Data Processing Industries such as Nvidia Corporation, Paypal Holdings.

The recent signing of a coronavirus aid bill and rollout of vaccines have increased expectations that the economy will quickly rebound from the pandemic, fueling gains in the market. 

 

South Korea (KOSPI Composite Index): +26.79%

The KOSPI index stood out in 2020 compared to other Exchanges across the Asia Pacific, South Korea's KOSPI Index recorded the highest gain Y-o-Y ahead of the Nikkei 225, Shanghai Composite Index, Taiwan Weighted Stock Index and, Bursa Malaysia (KLSE). The index gained +26.79% to close at 2,759.82 points on 22 December 2020 from 2,176.67 points recorded on 31 December 2019. 

 

Asia being one of the major epicenters of the coronavirus pandemic, South Korea's GDP rebounded by +2.1% in Q3 2020 after contracting by -3.2% in Q2 2020 riding on its weakest growth amid the pandemic. The country's exports, which accounts for half of the economy rebounded on the back of semiconductors and chipmakers (the second largest in the world) as the South Korean government pushed for more development in Artificial Intelligence (AI).

 

This move came at the right time as countries sought the need to ramp up digitization and tech stocks around the world recorded a surge in share prices. The KOSPI Index saw increased valuations based on a potential increase in earnings in 2021 therefore, more healthcare stocks and battery stocks became large caps.

 

Taiwan (The Taiwan Weighted Index): +18.55%

The Taiwan Weighted Index grew by +18.55% from 11,997.14 points it closed at on 31 December 2019 to 14,223.09 points. The global forecast for the Asian markets has been cloudy, with coronavirus concerns offset by vaccine optimism. This year, with the rise in technology stock prices, the Taiwan Exchange has been a major beneficiary as investors sought safety in companies such as semiconductor producers. The Exchange also befitted from a slew of liquidity resulting from QE, however, the Central Bank's stricter mortgage rules left buying interest in the home purchase market in the dumps.

Taiwan Semiconductor Manufacturing Company (TMSC) the most heavily weighted stock on the market with other bellwether tech heavyweights experienced increased investor sentiment as investors looked for where to put their money. TMSC share price rose by +53.96% from 334.50TWD on 30 December 2019 to 515TWD as of 28 December 2020.

 

China (SSE 180 Index - Shanghai): +14.29%

The Shanghai Stock Exchange grew by +14.29% to 10,254.81 as of points from 8,972.92 points on 31 December 2019. Despite prevailing uncertainties marked by the COVID-19 outbreak, as well as political, social, and economic concerns in China the markets have seen a string of initial public offerings (IPOs) and an intense rally in share prices of consumer and technology companies. One of the reasons for the performance of the Exchange is the overall resilience of China as it became the first major economy to return to post-coronavirus growth, this shored up confidence in the equities market. Stocks of internet groups, Technology such as Tencent Holdings have surged as consumers pivoted to online lifestyle during the pandemic (E-commerce, Technology, Food Delivery, Health-Tech, Gaming).

 

The China IPO market has seen increased listings in 2020 despite the economic challenges on the back of global investor demand for growth stocks; liquidity available from government stimulus policies, coupled with the US-China trade tensions, have caused more Chinese companies to seek primary or secondary listings on the Chinese Exchanges.

 

Shanghai, Shenzhen, and NASDAQ Exchanges led by deal numbers in Q3 2020, accounting for 54% of global IPOs. Shanghai dominated global exchanges by proceeds in Q3 2020, accounting for 25% of global IPO proceeds, Technology, health care, and industrials were the most active sectors on these four exchanges. YTD 2020's largest listings included the listing of Semiconductor Manufacturing International Corp. (US$7.5b) on the Shanghai STAR Market, JD.com Inc. (US$4.5b) on the Hong Kong Stock Exchange. IPO activity in Asia-Pacific is on track to well-exceed 2019 volumes and proceeds on the back of some mega transactions completed and in progress" according to a report by Ernst & Young on Global Ipo Trends in Q3 2020.

 

Top Five Lowest Stock Markets Performance In The World

 

Austria (ATX) : -15.04%

The ATX topped the list of laggards in 2020. The Austrian Traded Index is a capitalization-weighted index of the most heavily traded stocks on the Vienna Stock Exchange, as of 2019 the exchange comprised of 20 stocks. The index recorded the highest losses with a -15.04% decline from 3,186.94 points on 31 December 2019 to 2,707.52 points as of 22 December 2020. The decline of the ATX index was affected by the cyclical component of heavy-weight stocks in the financial, oil, and steel sectors listed and are currently causing a downturn, whereas in an economic recovery the stocks have a high potential for a rebound.

United Kingdom (FTSE 100): -14.44%

Britain was in the eye of the coronavirus storm as restrictions on traffic between the UK and other countries raised the pressure on supply chains, Brexit uncertainty, coupled with fresh lockdowns to prevent the new strain of coronavirus sweeping across southern England from spreading to the continent weighed on the capital market. The FTSE 100 ('Footsie') suffered its worst year since 2008,  it declined by -14.44% from 7,542.44 points on 31 December 2019 to 22 December 2020. During the market crash in February where global markets were at an all-time low, heavy falls were followed by a massive selloff on the bourse in March as investors braced for a recession. The FTSE 100 lagged and has since been playing catch-up. The British market has a high concentration of cyclical stocks in the Oil and Gas, Industrial, Financial Services, and Construction sectors which stalled the recovery. During the year, there was still a great deal of uncertainty about the future path of the market, with fresh lockdowns and disruption posing a major threat but a reversal flickers on the horizon.

While the Footsie is still down 14% Year-to-Date, it has seen a steady rise in December and received a recent boost after a trade deal with the EU was reached and another vaccine was approved.

 

Singapore (Straits Times Index): -12.67% 

The Straits Time Index declined by -12.67% to 2,827.81 points ON 22 December 2020 from 3,238.07 as of 31 December 2019. It is a capitalization-weighted stock Index that is regarded as the benchmark Index for the Singapore stock market. It tracks the performance of the top 30 companies listed on the Singapore Exchange. The major contributing factor to the decline is the component of the stocks listed; the stocks are pro-cyclical in composition representing real estate, financial Services, and manufacturing sectors which took major hits during the pandemic.

 

Belgium (Bel 20): -8.80%

The BEL 20 is a free-float market capitalization-weighted index that reflects the performance of the 20 largest and most actively traded shares listed on Euronext Brussels and is the most widely used indicator of the Belgian stock market. The index had its share of downturns as a result of the pandemic which slowed down economic activities, the index fell to a low of 2,528.77 points in March 2020 from 3,967.18 points in January 2020 then recovered in June to 3,540 points. Although the index is lagging in terms of recovery compared with other indices, the Bel 20 proves resilient as it struggles to rebound to pre-pandemic levels. Year-to-Date, the index declined by -8.80%.

 

France (CAC 40): -8.55%

The CAC 40 is a free-float market capitalization-weighted index that reflects the performance of the 40 largest and most actively traded shares listed on Euronext Paris and is the most widely used indicator of the Paris stock market. the Paris bourse ends the year in red with a -8.55% decline in 2020 to 5,466.86 points as of 22 December 2020 from 5,978.06 points on 31 December 2019.

French stocks tumbled this year as France dealt with its share of coronavirus concerns with over 2 million cases and 190,00 deaths in the country,  lockdown measures, uncertainties about the Brexit negotiations and economic downturn weighed in on the market.

 

Stock markets in Europe have been the laggards in 2020 but saw renewed optimism after European Union (EU) officials and British lawmakers approved a separation deal that will govern trade and other relations from 2021 in addition to the new roll-out of vaccines  helping boost sentiment and spur the markets to recovery in the near term. the outlook for the French index in the days ahead is optimistic.

 

Exchange	Country	31-Dec-19	22-Dec-20	% Change
Nasdaq	USA	8972.6	12807.92	42.74%
KS11	South Korea	2176.67	2759.82	26.79%
Taiwan Weighted	Taiwan	11,997.14	14223.09	18.55%
SSE 180 Index (Shanghai)	China	8972.92	10254.81	14.29%
S&P500	USA	3230.78	3687.26	14.13%
Nikkei 225	Japan	23656.62	26524.79	12.12%
NIFTY	India	12182.5	13466.3	10.54%
SSE Composite Index (Shanghai)	China	3084.69	3378.35	9.52%
MICEX Index	Russia	3050.47	3236.46	6.10%
Dow Jones Ind. Avg.	USA	28538.44	30015.51	5.18%
^KLSE	Malaysia	1595.83	1640.56	2.80%
S&P/TSX Composite Index	Canada	17098.56	17500.89	2.35%
AEX General	Netherlands	604.58	617.5	2.14%
DAX	Germany	13249.01	13418.11	1.28%
All Ordinaries	Australia	6810	6892.6	1.21%
Bovespa	Brazil	115645.34	116636.18	0.86%
All Share	Sri Lanka	6318.21	6318.21	0.00%
IPSA	Chile	5058.88	5058.88	0.00%
Madrid General(IGBM)	Spain	1142.35	1142.35	0.00%
MIBTel	Italy	15743	15743	0.00%
TA-100	East Isreal	1292.38	1292.38	0.00%
Swiss Market Index	Switzerland	10616.94	10403.37	-2.01%
IPC	Mexico	43541.02	42601.71	-2.16%
^JKSE	Jakarta	6271.11	5996.71	-4.38%
Hang Seng	Hong Kong	28499.5	26280.24	-7.79%
MerVal	Argentina	41671.41	38390.84	-7.87%
S&P/MIB Index	Italy	25890.37	23787.23	-8.12%
PSEi	Phillipines	7839.79	7202.39	-8.13%
CAC 40	France	5978.06	5466.86	-8.55%
BEL-20	Belgium	3955.83	3607.72	-8.80%
Straits Times(STI)	Singapore	3238.07	2827.81	-12.67%
FTSE 100	UK	7542.44	6453.16	-14.44%
ATX	Austria	3186.94	2707.52	-15.04%

 

As 2021 shuffles in, there is mild optimism that global equity markets will begin to edge up as supply chains become restored, manufacturers increase sales volumes and workers get back to their jobs on the back of a COVID-19 vaccine that would likely cover most of Europe and America by Q2 2021 and other continents between Q3 and Q4 2021.

 

With COVID-19 pandemic kept in check global GDPs are expected to rise steadily and stock markets are expectedly to roar a little louder, with bulls mauling bears, but only mildly.

 

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