It seems like just last week we were still plagued by worries over how Greece’s problems might spread to the rest of Europe, and markets seemed dead. Yet, as of today, when I tabulated how markets have performed over the last one month (as of 8 March), the numbers are revealing. They show that most stock markets have bounced back quite a bit over the last one month. I looked at the category average in the fund selector and drew up a table. Table 1 shows the best performing to worst performing funds on Fundsupermart divided via geography.
Table 1 (Average Performance of funds in area)
| 1 month | 1 month | 1 month | |||
Australia | 11.31% | China | 7.61% | Italy | 5.63% |
Brazil | 10.22% | Asia ex India ex Japan | 7.46% | Germany | 5.62% |
Latin America | 10.22% | Hong Kong & Singapore | 7.01% | Taiwan | 5.54% |
BRIC | 8.48% | Thailand | 6.98% | US centric | 5.38% |
Korea | 8.32% | Russia | 6.73% | Asia Inc Japan | 5.12% |
Asia ex Japan | 8.18% | Indonesia | 6.46% | Iberia | 5.06% |
Eastern Europe | 8.06% | Asia Pacific ex Japan | 6.40% | Singapore | 4.83% |
India | 7.96% | Hong Kong | 6.33% | Turkey | 4.47% |
Emerging Markets | 7.95% | South East Asia | 6.32% | Middle East & North Africa | 2.17% |
China and India | 7.76% | France | 6.29% | Japan | 1.84% |
Greater China | 7.70% | Europe Inc UK | 6.14% | Vietnam | 1.47% |
Malaysia | 7.68% | Global | 5.75% | ||
As table 1 shows, Australia, Brazil, Latin America, BRIC and Korea funds were the strongest performers on average over the last one month. Everything went up. Its was mainly a difference of how much. If your equity fund actually fell over the last one month, it would have been an oddity. Not surprisingly, Asia, and emerging markets funds, having stronger fundamentals and growth prospects, rebounded more strongly than developed markets. At the bottom of the table, Japan and Vietnam equity funds disappointed. I turned to look at the sector funds now in table 2.
| Sector | 1 month |
Resources | 12.51% |
Gold and minerals | 11.08% |
Materials | 9.47% |
Finance | 8.80% |
Property | 6.55% |
Energy | 5.50% |
Technology | 5.17% |
Utilities | 0.35% |
The performances of the sector funds suggest that resources, gold and finance funds have bounced back in a big way. Commodity and resource related funds are again a favorite. Finance is quite close to the top as well though, which is surprising given the large amount of bad news and potential crisis that the sector always seems to generate. I believe its because it is priced cheaply at the moment. Lots of people don’t dare or wouldn’t touch finance stocks with a ten foot pole right now, but very often, it is such times when there are the best bargains to be had. So, the finance funds could still give us a shock yet as this year plays out.
| 1 month | |
Emerging Market Bond | 0.31% |
Short Duration Bond | 0.26% |
Singapore Bond | 0.04% |
Global Bond | -0.14% |
Asia bonds | -0.18% |
High Yield | -0.41% |
Investment grade | -1.29% |
The biggest underperformers this month were the fixed income funds. Its not really that they are bad as an asset class. Indeed, when volatility is very much present in stock markets, as it was in January and February, investors appreciate the stability bond funds bring. But now, in hindsight, it looks like my decision to shift 20% of my bond funds into equity funds in February was a good one. Bond fund returns are likely to stay relatively low given the still abnormally low interest rate environment throughout much of the world. But given the high degree of volatility in markets, I think most of us would still appreciate having at least some bond funds, low return or otherwise.
My sense of the current situation is that a lot of the bad news in recent times like Greece’s bad debts, China tightening, Central bank exit plans, and such have now all run their course in the media. So, these are mostly all factored into markets already. In the midst of these, the global economy continues to grow, with Asia and emerging markets leading the way. So, with much of the bad news already factored in, I believe that the upcoming few months would see gains in most stock markets as positive earnings data and economic data continues to filter through. For those still waiting on the sidelines, don’t wait too long. When markets rally, the speed at which they do so can often catch many investors unawares. Looking at just table 1 and 2 alone, I think many of us would have been shocked that some of the funds have gained close to 10% within the last one month alone.
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