What Bull Market?

One of the biggest questions heading into 2008 is whether or not the global equity rally can keep going for a sixth straight year.  Implied in this statement is that 2007 was the fifth year of a global bull market.  However, a look at the returns of major international indices in any currency but the dollar shows that 2007 was not really such a great year.  Below we highlight the 2007 returns of major international equity indices, in terms of Euros.  Of the 12 indices we listed, only five had double digit returns in 2007, and four finished 2007 down for the year, including the US which was the second worst performer behind Italy. 

 

 

Comments

[Bullion]

Can you check the Nikkei performance in EUROS?
NIKKEI225@31DEC2006=17225,83
NIKKEI225@31DEC2007=15307,78

EUR/JPY@31DEC2006=157,15
EUR/JPY@31DEC2007=162,93

[Ajay Jani]

It may be worth double checking the figures. Using Bloomberg as a datasource, the ASX 200 index closed 2006 at 5,669.90 and the Euro closed 2006 at 1.3199. So in Euros, the ASX was priced at 4,295.70 (5669.90/1.3199).

At the end of 2007, the ASX was priced at 6,339.80 and the Euro was priced at 1.4590. This leaves the ASX price in Euros at 4,345.31. (6339.80/1.4590).

So in 2007, the ASX in Euros went from 4,295.70 to 4,345.31 which is a gain of 15.5%

Similar disparities can be seen in HK, where the market gained 39% in local currency terms while the HKD lost around 11% to the EUR, stilll leaving a nearly 30% gain in EUR terms.

[Paul Hickey]

Ajay and Bullion,

Thanks for pointing that out. The numbers have been updated.

[Student Jake]

Jani,

r u sure ur calculations are right?

(1+Rf)=(1+Rd)(1+Rc)
1+Rf=1.39311x0.901247
Rf = 0.2555

Hang seng in euro = 25,55 %