Global Economy
Global shares rose 20% in 2013; Nikkei best in 41 years, Dow in 18
By Michael Hennigan, Finfacts founder and editor
Jan 1, 2014 - 9:27 AM

Shinzo Abe, Japanese prime minister, rings the closing bell of the Tokyo Stock Exchange, Dec 30, 2013 - - the last trading day of a banner year that saw the Nikkei 225 benchmark surge to the highest annual rise since 1972.

Global shares rose 20% in 2013 with Japan's Nikkei 225 having its best performance since 1972, 41 years ago while in the US, the Dow Industrial Average had its best year since 995, 18 years ago.

The MSCI All-Country World Index of stocks in developed and emerging markets closed Tuesday at 408.33, its highest level since late 2007 and up 20% in 2013. The index contains stocks from 46 different countries with 23 countries classified as developed markets and 23 countries considered emerging markets. The MSCI Emerging-Market Index fell 5% in 2013.

Bond purchases by the US Federal Reserve amounting to over $1tn at an annualised rate and a massive effort by the Bank of Japan to end 15 years of deflation by expanding the money supply, coupled with an improving global outlook underpinned the rally in shares. Bloomberg reported that the biggest rally since the 1990s is pulling annual gains back toward historical averages after the credit crisis wiped out $11tn in total US market value. Everyone from Pacific Investment Management Co.’s (PIMCO) Tony Crescenzi to Robert Shiller, the Yale University economist and Nobel laureate, observed in 2009 that investors were no richer then than they were a decade earlier.    

Finfacts: Commodity prices down in 2013; Gold plunges; US dollar and euro rise

Bloomberg data showed that the best-performing stock market in 2013 in dollar terms was Venezuela, which had  a return of 296%. It was followed by Dubai (108%), Abu Dhabi (63%), Bulgaria (48%), Ghana (44%), Nigeria (44%), Kenya (43%), Argentina (42%) and Ireland (39%).

Europe

The pan-European Stoxx Europe 600 Index rose 17% in 2013, the biggest annual gain since 2009, as the economic crisis in the region eased.

At Tuesday's close, London's FTSE 100 index was up 14% for the year. France's CAC-40 was 18% higher and on Monday the German DAX index ended the year's trading up 26% in 2013.

Ireland's ISEQ index had the best performance in Europe, which we cover here:

Finfacts: Irish shares rose by 33.6% in 2013; ISEQ index back to early 1998 levels

Spain's IBEX 35 and Italy's FTSE MIB advanced 21% and 17% respectively, while Greece's ATHEX Composite jumped 28%.

Asia

Japanese shares have been the best performers this year among the 24 major developed markets tracked by Bloomberg as Prime Minister Shinzo Abe and the central bank acted to reverse deflation.

While the Nikkei 225 Stock Average had its best year since 1972 with a 57% rise, the MSCI Asia-Pacific Ex-Japan index rose only 0.4% in 2013.

The index traded at a price-to-earnings ratio of 13.3, data compiled by Bloomberg show. That compares with an earnings multiple of 17.9 on the MSCI All-Country World Index

The Shanghai Composite index fell 6.8%, a third year of falls out of four. In Hong Kong, the Hang Seng index gained almost 3% while Singapore's Straits Times Index was flat with a 0.01% rise compared with 19.7% in 2012.

In India, the S&P BSE Sensex added 8.97% in 2013; South Korea's Kospi index rose 9% and Australia's S&P/ASX 200 climbed 15%.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) had a 10.5% gain on the year, Southeast Asia's second-best performing bourse after Vietnam, which saw its benchmark VN Index close up 22%.

Amidst political turmoil, the Thai stock market ended 2013 with a 6.7% loss, the first in four years. Indonesia benchmark fell 2.1%; in Pakistan, the Karachi market gained 49% in 2013.

US

The Wall Street Journal said that US stocks rose on the final trading day of 2013, capping the Dow industrials' biggest annual rally in 18 years. It closed at 16576.66 - - at a record high for the 52nd time in 2013 and a 27% annual rise for its best annual performance since 1995.

The S&P 500 gained 30% in 2013, its best year since 1997 while small companies' shares performed even better. The Russell 2000 index of small companies' shares rallied 37% this year, its biggest such rally since 2003.

The Nasdaq Composite rose 38%.

Americas & Africa

In Brazil, the Ibovespa index fell 15.5%  in 2013 after a gain of  7% in 2013 while in South Africa, the benchmark Top 40 stock index rose to a record high Tuesday to closet 2013 with a 19% annual gain.

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