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Monday, January 21, 2019 1:30PM /Proshare
Research
Global stock markets generally fell in 2018 as a shrinking global
economy, heightened tensions amongst leading trading partners in America, Asia
and Europe and festering political anxiety in a number of emerging markets has
led to slower economic growth rates and tumbling stock prices worldwide. Global
equity markets, according to consensus analyst’s reports, will keep sliding in
2019.
The major challenges to equity markets and trade growth in the New
Year will be commercial conflicts between China and the United States of
America (USA) and Italy and the European Union (EU). Both conflicts centre on
blossoming egos, fiscal positions and a desire to grow domestic employment.
Progressing into the year, the global economy is expected to decelerate
from 3.8% in 2018 to 3.5% in 2019; America will likely see growth rate drop
from 2.9% in 2018 to 2.5% in 2019, while the Chinese economy will likely slump
from 6.6% in 2018 to 6.2% in 2019. Europe’s growth will also wind down as
shrinking trade and fiscal deficits in member nations pull down growth from
1.9% in 2018 to 1.6% in 2019. Global Stock markets will, therefore, generally
reflect these worsening conditions.
Argentina MerVal (YTD): 0.8% |
The Argentine MerVal had a positive but
marginal performance in the year 2018 in contrast to the strong growth in
2017. Economic strains reflected a currency crisis that necessitated an
International Monetary Fund (IMF) bailout. The Argentine Peso lost 18% of its
value within 12 days in the month of May 2018. The country’s economy suffered
a downturn like most other commodity-dependent nations as export prices fell
steadily over the year. The fall in fiscal revenue in 2018 led to the
Argentine government raising local interest rates and reducing money supply.
Both actions resulted in a slowing of economic growth. The currency troubles
pulled the Index down as the economy faltered. |
Brazil Sao Paulo Bovespa (YTD): 15.0%
|
The Bovespa outperformed all Stock Indexes in
Latin America in 2018 as the Brazilian
economy showed resilience in the face of economic headwinds that had stalled
growth of other economies in the region. The Index gain in 2018 was the third
straight year of positive growth in the last 10 years despite the fact that
foreign investors pulled out $2.8mln from the market in the year. The re-election of President Jair Bolsonaro in October
was hailed by local investors but was treated with more circumspection by
foreign portfolio managers. |
Japan Nikkei Stock Average (YTD): -12.1%
|
Japanese Nikkei Average Stock Index closed the
year negative as the Japanese economy sustained growth momentum. The pullback
though surprising to some analysts, makes sense within the context of the
United States of America’s determination to reduce its trade deficit with
Japan and China. Uncertainty about the impact of American policy on the
future of Japanese trade relations and the recent rise in the dollar against
the yen on rising domestic American interest rates has left investors wary
about the Japanese equities market. |
France CAC 40 (YTD): -11.0%
|
The French economy has been under pressure in
2018 with the economy’s growth lagging that of the rest of Europe. The strengthening
of the EU currency, the Euro, last year seems to have caused problems for
French exports and slowed down domestic growth. French President, Emmanuel
Macron’s, problems with raising domestic taxes and reducing governments large
fiscal deficit seems to have taken a significant toll on the French
macro-economy and its stock market as several weeks of persistent workers
protests and strikes merely worsened investor’s perception. |
US Dow Jones Global (YTD): -11.4%
|
The American Dow Jones fell -11.4% at the end of 2018, reflecting increased
concern about the United States of America’s (USA’s) trade relations with the
rest of the world, despite its strong economic outlook for the domestic US
economy. The US economy saw
unemployment rate in 2018 decline to 3.7%, inflation rate drop to 2.2% and
economic growth rise to 3.4%. These factors alone should have reflected
positively on the US Dow Jones (Global) but growing trade concerns seem to be
a major dampening influence. |
Singapore Strait Times (YTD): -9.8%
|
Similar to challenges of sister markets in
Asia, the Strait Times may likely have to wait until the end of H1 2019
before it sees any major or sustained rise in value, as investors wait to see
how the US and China trade conflict resolves itself. However, it will be
recalled that mid-year 2018, the Strait got hammered after the government
announced additional policy measures to cool off a worsening property bubble
with real estate prices soaring beyond underlying net asset fair values. This
was perhaps the single most significant influence on the Strait Times in
2018. As with other Asian markets, the outlook for the Straits in 2019 will
depend heavily on global economy expansion. |
China Dow Jones (YTD): -26.51%
|
The Dow Jones China Index closed 2018 at a significant
low as trade conflict between China and the United States put both the
Chinese economy and its stock market under persistent pressure. China’s
longstanding trade surplus with the United States created a difference of
opinion between both countries resulting in two trading partners introducing
new countervailing trade tariffs that have restricted bilateral and
multilateral trade. China Dow Jones in 2019 will depend on: ·
Resolution
of bilateral conflict between China and the US ·
Reduction
in China’s trade surplus with the US ·
A
fall in Yuan/dollar exchange rate ·
A
cooling of political tempers |
Russia RTS (YTD): -7.11%
|
Russia’s RTS Index came crashing down in 2018
like other markets in the Far East. The Russian market suffered mainly as a
result of the declining fortunes of the international oil market. With oil
price uncertainty, most of Russia’s listed
oil behemoths saw their prices take a knock as investors became wary of
revenue declines as prices slumped. The principal outlook for the RTS Index
in 2019 will depend on the following: ·
The
direction of oil prices; likely to hover between $55 and $65 per barrel ·
Reduction
of the country’s fiscal deficit; a surplus, the first since 2011 likely ·
Private
consumption spending; likely to rise ·
Fortunes
of commodity markets in general in 2019 |
Stock markets performance globally has been very
unimpressive. Right from Europe to Asia and the US, stock markets seem to be
witnessing some downturn as seen in the performance of benchmark gauge during
the year under review.
Out of about thirty-two (32) stock market
reviewed, only six (6) are in the green while the remaining twenty-six (26) are
in red.
The Russian index is currently top with +13.80% gain and closely followed by the Brazilian
Bovespa and the Madrid General with +12.94% and
+11.24% gains respectively. On the other
hand, the Italian S&P/MIB Index and the Chinese SSE Composite Index both
dipped by -23.64% and -20.88%
respectively to the list of markets in red.
In the Nigerian Stock Market which is our
primary monitoring market, the key benchmark index, NSE ASI, YTD currently
stands at -19.95% to emerge as the third worst
performing stock market.
SN |
Country |
Exchange |
29-Dec-17 |
10-Dec-18 |
% Chg |
1 |
Russia |
MICEX
Index |
2,109.74 |
2396.84 |
13.61% |
2 |
Spain |
Madrid
General |
1,015.17 |
1142.35 |
12.53% |
3 |
Brazil |
Bovespa |
76402.08 |
85914.71 |
12.45% |
4 |
Argentina |
MerVal |
30065.61 |
30753.54 |
2.29% |
5 |
USA |
Nasdaq |
6,903.39 |
7020.52 |
1.70% |
6 |
India |
NIFTY |
10,435.55 |
10488.45 |
0.51% |
7 |
Sri
Lanka |
All
Share |
6,369.26 |
6318.21 |
-0.80% |
8 |
USA |
Dow
Jones Ind. Avg. |
24,719.22 |
24423.26 |
-1.20% |
9 |
USA |
S&P500 |
2673.61 |
2637.72 |
-1.34% |
10 |
Chile |
IPSA |
5564.6 |
5405.32 |
-2.86% |
11 |
Indonesia |
Jakarta
Composite |
6355.654 |
6072.42 |
-4.46% |
12 |
Japan |
Nikkei
225 |
22764.94 |
21124.76 |
-7.20% |
13 |
Malaysia |
KLSE
Composite |
1796.81 |
1655.17 |
-7.88% |
14 |
Australia |
All
Ordinaries |
6167.29 |
5634.2 |
-8.64% |
15 |
Canada |
S&P/TSX
Composite Index |
16,209.13 |
14795.13 |
-8.72% |
16 |
Taiwan |
Taiwan
Weighted |
10642.86 |
9704.64 |
-8.82% |
17 |
Switzerland |
Swiss
Market |
9381.87 |
8551.02 |
-8.86% |
18 |
Netherlands |
AEX
General |
544.58 |
495.31 |
-9.05% |
19 |
Singapore |
Straits
Times |
3402.92 |
3060.75 |
-10.06% |
20 |
France |
CAC 40 |
5,312.56 |
4742.38 |
-10.73% |
21 |
United
Kingdom |
FTSE 100 |
7,687.77 |
6721.54 |
-12.57% |
22 |
Philippines |
PSE
Composite |
8558.42 |
7348.21 |
-14.14% |
23 |
Hong
Kong |
Hang
Seng |
30,455.08 |
25737.24 |
-15.49% |
24 |
Mexico |
IPC |
49354.42 |
41356.04 |
-16.21% |
25 |
South
Korea |
Seoul
Composite |
2467.49 |
2055.18 |
-16.71% |
26 |
Austria |
ATX |
3420.14 |
2841.82 |
-16.91% |
27 |
Belgium |
BEL-20 |
3977.88 |
3286.92 |
-17.37% |
28 |
China |
SSE 180
Index (Shanghai) |
8,647.03 |
7117.15 |
-17.69% |
29 |
Germany |
DAX |
12,917.64 |
10622.07 |
-17.77% |
30 |
Nigeria |
All
Share Index |
38243.19 |
30614.73 |
-19.95% |
31 |
China |
SSE
Composite Index (Shanghai) |
3307.172 |
2591.75 |
-21.63% |
32 |
Italy |
S&P/MIB
Index |
24,191.88 |
18741.98 |
-22.53% |
Source: Proshare
Markets
NB: Data is as at December 10, 2018
Do feel free to share your opinions/observations and feedback with
us vide content@proshareng.com and/or research@proshareng.com
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