Some of the biggest stocks markets failed to give any return to the investors in last 5 years. This was primarily due to the greatest depression of post war era. But emerging market seemed to be very less effected by the downturn as the returns on investment zoomed in 5 years.
I took 5 major stock exchanges of the world covering developed and developing nations. Indices include S&P 500 (US), FTSE 100 (UK), Nikkei 225 (Japan), CSI 300 (China) and BSE (India).
Chinese stock exchange, CSI 300, gave a return of almost 222.22%. Chinese economy remained strong throughout the recession and continued its impressive growth story while western economies were struggling to survive worst recession of this generation. China meanwhile took over many big economies to become second largest economy of the world.
Second most impressive growth, among our selected markets, was seen at BSE (Bombay Stock Exchange) in India. BSE rose from levels of 7800 in Aug 2005 to 18000 in Aug 2010. This was a gain of 131%. India had least effect of downturn among all the big economies of the world. Indian economy is driven by domestic consumption and it seems its tight monetary and fiscal policy paid off. Indian banks were very well capitalised and had very little exposure outside India.
Coming on to developed countries, it seems they made mess of every financial step they took before downturn started. FTSE 100 of UK is standing still at same level where it used to be 5 years ago. But there is something to cheer for FTSE, it has performed better than most of the stock exchanges of the developed world.
S&P 500 of US tell the story of the biggest mess by biggest economy of the world. S&P 500 was at 1230 in Aug 2005 and it is at 1120 currently, that is a loss of –7.3%. Story is more gruesome for Japan who has already lost a decade and now on verge of losing another one. Japan was already suffering from historic deflation and then came downturn. NIKKEI 225 has given a los of 21.3% to its investor. Nikkei fell from 12200 in 2005 to 9500 in 2010.
On one hand developing world is ready to make all difference but pastures no more seem to be greener on the other side. Developed countries would take sometime now to recover from recession and regain old financial solidarity, meanwhile there is a big chance for emerging economies to level the playing field.
