Sri Lanka bested the return of the Shanghai-based SSE Composite Index, the proxy for the largest publicly traded companies in China. The SSE rose almost 80% for the year, driven by the rapid recovery from the recession by the People’s Republic and a balloon in the overall equities market drive by a rush of liquidity from the government’s $585 billion stimulus package. Hong Kong’s Hang Seng Index rose over 50%.
Equities traded in the other huge emerging economy in the Asian basis, India, rose over 80% as the Bombay BSE Sensex reacted to a 7% GDP jump in the third quarter. Reuters reports that earnings estimates for many large companies based in India have been revised sharply upward recently.
The biggest surprise among Asia markets has to be Japan’s Nikkei 225. It rose 20%, almost the same as the DJIA. The result was unexpected because the Japanese economy still faces slows growth and deflation. Some economic experts do not expect the world’s N0.2 economy ranked by GDP (which may have been passed by China in 2009) to recover for at least a year. But, Japan can still claim that its exchange includes some of the world’s largest and stable multinationals such as Toyota (NYSE:TM) and Sony (NYSE:SNE)
The stock markets of the old European economies did not do any better than those in the US based on a look at the German Dax and UK FTSE. They managed a return similar to the DJIA as their economies took historic beatings during the 2009 downturn.
The DJIA was up a bit under 20% in 2009, but its best performing component, American Express (NYSE:AXP), was up 108% for the year. Good, but not as good as Sri Lanka.
It is stunning that global markets did as well as they did in the worst economic year in eight decades, but 2010 may be better and hope springs eternal.
Douglas A. McIntyre
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