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Global Stock Markets Behaviour ...In Last 30 Years

Japan is a strange story. Internally, embroiled in several political upheavals, it hasn't rewarded its investors at all in 3 decades.

Photo Credit : Subhabrata Das

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Comparing 7 leading stock market indexes, over the last 30 years, is a herculean task. Yet technology & data exists to facilitate market comparisons of 7 major world indexes from 26 November 1990 to Nov 26 2019, namely S&P 500 OF USA, DAX 30 OF Germany, T5X Composite of Canada, NIKKEI 225 OF Japan, CAC40 OF France, Hang Seng of Hongkong & FTSE 100 OF UK.

Visual Capitalist did this stupendous exercise using Macrotrends, an excellent source of historical data of all these indices. But any realistic attempt would require a strong base figure to compare holistically.S&P 500  was chosen as the base, as it is the very credible measure of USA stock market performance. Data of all other 6 indices had to be converted on the same scale as S&P 500, for meaningful results. Also, S&P has been on a huge incline in the last 10 years, rising from nearly 800 in 2010 to 3170 in 2019.

How have other country stock indices behaved with respect to the S&P 500, is a valid question in the minds of avid investors? A very varied picture emerges as the comparisons are analysed. The USA tops the list with a 901 per cent gain in three decades, while Japan stays stagnant over the same period.

Germany & surprisingly, Hong Kong, are back to back in rewarding their investors with capital accretion of 820 per cent & 824 per cent respectively. Dax 30 has jumped from less than 400  to 3000 between 1990 & 2019, while Hang Seng catapulted from 400 to 3200 during that time. Wise investors have become millionaires & some billionaires depending on their futuristic investments. These 2 countries also have had steady growth patterns during this time.

Canada 's index is half as strong, increasing from around 400 to 1717, an incline of nearly 444 per cent, which is a no mean achievement by any standards. Despite stiff winters, the country has provided reasonable returns to its investors, much higher than many countries of EU.Canada
pension funds are now increasingly looking outwards for higher returns.

France & UK markets are not so enticing, however, over three decades, France's index rose from less than 400 to 1117 or a rise of about 268 per cent, a not very encouraging sitrep for the ambitious investor.UK Index was on a similar trajectory, going up from about 400  to 1073....a 238 per cent return over a long period.No wonder these 2 European giants of yesteryears, are no longer the financial market barometers.

Japan is a strange story. Internally, embroiled in several political upheavals, it hasn't rewarded its investors at all in 3 decades. Yet in overseas markets, Japanese firms like Suzuki, Honda, Mitsubishi have made handsome profits & delivered huge returns. Clearly the index has not kept pace with some of the GALLOPING Japanese companies.

Pitiably ,India was not a part of this data conversion study, for international stock market comparisons. But if a normal attempt is made to see how Sensex has fared, independently of same scale &  yardstick equalization, the situation appears to be the best. From touching 1001 in 1990, Sensex zoomed to 39000 in 2019 the same 30 year time period, with a whopping 3900% escalation, or 39 times the investment. This fact is hardly bandied about in any international fora by India, despite being the most perceptible & eloquent testimony of India's forward March.

Perceptive NRIs, FIIs & big foreign direct investors have seen the writing on the wall,& made a beeline for sifting & sorting hot Indian stocks. Ratan Tata puts his private savings in top of the line startups.FDI  is cruising well exceeding $ 60 billion last year & on a  similar incline this year. Interviews of top foreign investors visiting India, talk of country's long term strengths & the long haul they are looking for when investing here. Finance Ministry needs to wary of our stock indices, & should do nothing to hurt investors' sentiments. Expectations rule the market & who would want such expectations to be ruined? Certainly, not the Government of India  !!!.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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J.K. Dadoo

The author is a retired IAS officer

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