Sunday, January 20, 2008

Equity Weakness: A Global Look


Here we see 2008-to-date international equity returns for the ETFs representing Japan (EWJ); Hong Kong (EWH); China (FXI); Singapore (EWS); Australia (EWA); Taiwan (EWT); U.S. (SPY); and EuroStoxx (FEZ).

Asian weakness has been on a par with weakness in the U.S. and Europe. What is noteworthy is the degree to which we're seeing negative returns worldwide, including the markets hot in 2007 (Hong Kong, China). Also interesting is that the market that underperformed in 2007 (Japan) is now displaying a bit of relative strength. (Note also recent yen strength).

Should we be looking at global recession--not just slowdown in the U.S.--the implications would be significant for economies (and markets) dependent upon exports and commodity inflation.

RELEVANT POST:

World Equity Returns for 2008
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1 comment:

Anatrader said...

Brett

I concur with your view that we should also look at slowdown not only in the US but worldwide.

Eg China has been exporting substantially to the US and if US consumers buy less, China would be exporting less. However, China could still survive due to its massive population of consumers.

Small nations who export mainly to the US may find it harder to survive. Singapore is one but due to its diversified economies in the emerging nations like China and India, there is also hope for survival.

However, if US were to go into recession,the world will be affected, dependent upon exports and commodity inflation, as you put it.