A troubled year, but 2009 was still the second best of the decade
Weekly international investment round up to January 5, 2010
For many investors 2009 was a fantastic year. In a decade which included two major wars, two recessions, frightening global terrorist attacks, the bursting of the property market bubble and the near collapse of the financial system last year also represented the second best investment year of ‘noughties’.
The crown of ‘Best Performing Market’ now passes from the 2008 winners, Tunisia, to new 2009 champs ‘Sri Lanka’ as the Colombo Stock Exchange grew by 125%, reflecting hope for a country long strangled by civil war.
While Sri Lanka may not have been on most investors’ radar screens even our local market emerged from a tough year nearly 8% higher however, this was outshone by the larger international markets which had fallen further but bounced back higher. In fact, before last spring their outlook appeared extremely grim as they attempted to crawl out of the worst recession in more than a generation. In April’s ‘Green Shoots’ article I optimistically asserted my belief that things were changing and stated ‘while sentiment in the herd may still largely be negative and it’s still true that all boats float or sink with the tide, isn’t it amazing how some are still surprised when spring follows winter?’
After hitting a 12 month bottom on March 9th two of America’s leading indexes, the Dow Jones and the S&P 500, began to rally and strongly rebounded from this low point adding 59% and 65% respectively by year’s end. Their full year figures show an overall growth of nearly 20% for the Dow Jones and just over 23% for the S&P 500 in 2009. However, Europe’s leading markets finished the year with remarkably similar growth figures; London’s FTSE and France’s Cac were up by 22% while Germany’s Dax climbed 23%. Even in the East, deflation-hit Japan’s main market managed to achieve similar growth figures, Hong Kong’s Hang Seng soared by over 50% while China’s CSI skyrocketed by 80%.
After a year of unprecedented change in the motor industry Ford’s 336% share price increase is nothing short of staggering and indicates a very bright future for this manufacturer but top spot in the S&P 500 went to insurer XL Capital with an amazing 395% share gain. It has also been interesting to note that in the UK the most bought and sold shares were banking stocks reflecting this particular sector’s roller coaster ride and their love/hate relationship with investors.
After hitting a record price of $1,226 per ounce in early December gold finished up by 24%, its eighth consecutive positive year of growth. Silver shone by almost 50% whilst platinum radiated a 55% return. The world’s most traded and watched commodity, oil, delivered a slick 78% increase in 2009.
The past decade has provided many highs and extreme lows. For investors, America’s Dow Jones index has actually decreased overall by 8% while Peru’s stock market has performed the best, returning 850%. Goodbye to the ‘noughties’ and hello to the ‘tens’! Next week I will review my 2009 predictions and highlight what may lie ahead in 2010.