Loose
monetary policies by the central governments of major developed markets have
made a substantial impact on various asset classes (equities, debts, commodities
and currencies) around the globe this year. The major bond buying programs were
aimed to kick start the struggling economy but made its way into risky assets
like equities. The successful trade of 2013 so far is “long developed market
equities, short bullion.”
As
seen from the table, benchmark indices of US, UK and Japan have given handsome
double digit returns so far this year. The momentum in these markets may
continue as major indices of US (barring Nasdaq) and UK (barring CAC) are
trading at life-high. Nikkei is trading close to its 5 ½ year high. Emerging
markets have posted negative or single digit positive returns this year,
underperforming developed markets.
Gold
which was considered to be safe haven has lost its sheen (down 26%). Investors
have dumped gold as US economy rebounds and the yellow metal is now trading
merely 5 percent above its three-year low price touched earlier this year.
Silver - more volatile than gold has lost 35% so far this year.
| Developed Markets |
US
|
UK
|
Japan | ||||
| Indices | Dow Jones | NASDAQ | S&P 500 | DAX | CAC | FTSE | Nikkei |
| YTD Returns% |
22.59%
|
32.20% | 26.54% | 18.52% | 14.59% | 10.73% | 43.91% |
| Emerging Markets | Brazil | Russia | India | China | Indonesia |
| Indices | Bovespa | RTS | Nifty | Shanghai | Jakarta |
| YTD Returns% | -13.37% | -5.37% | 1.53% | -3.21% | 0.03% |
| Bullion | Gold | Silver |
| YTD Returns% | -26.17% | -35.11% |
