World Indices 2004 - A check - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

World Indices 2004 - A check

Mar 5, 2004

Equities outperformed all asset classes in the year 2003 on the back of improving (in some cases stabilising) economic performances. Amongst equities also, there were varying performances by stock markets across the world with the Asian bourses clearly outperforming their western counterparts (see table below). Rather, it would be more correct to say that emerging markets beat the developed markets in 2003 owing to their strong growth prospects and relative attractive valuations. But, with 2003 having already ended, that is history now! Here in this article, we look at the present i.e. 2004 and how have the various world indices performed to date and the probable reasons for the same.

World Indices: A mixed picture...
IndexCountry2003 % gain2004 % gain*
Shanghai CompositeChina10%11.5%
Straits TimesSingapore32%7.3%
Hang SengHong Kong35%7.0%
Nikkei 225Japan24%6.8%
DAXGermany37%4.3%
NasdaqUnited States50%2.6%
FTSEUnited Kingdom14%1.8%
DowUnited States25%1.3%
BSE-30India73%-0.4%
* As on March 4, 2004

Akin to last year, the Asian stock markets (barring BSE-30) have continued to outperform their peers in the developed world. This could be attributed to the continuing strong prospects of these (Asian) countries in wake of the various positive developments like reforms, outsourcing opportunities, export growth, improving per capita income and the 'China' factor.

While various reform initiatives (especially in banking) have led to the Asian economies becoming much more stronger since the crisis of 1997, the outsourcing and export opportunities continue to provide the necessary impetus to their economies. Owing to their low labour and production costs not only are many Asian economies capable of taking significant advantage of the growing outsourcing trend, but this also provides them with an edge in exports, especially IT exports (electronics).

Moreover, considering the improving per capita incomes and favourable demographic structures, which comprises of a larger proportion of younger population, it would lead to higher domestic consumption of a wide range of goods especially considering the fact that the current consumption base is much lower compared to the developed economies. Furthermore, last but not the least, China has been spearheading the growth in the Asian region, whose GDP has been growing at a blistering 8%+, leading to increased consumption of practically every item, which has not only led to increased trade within the region but also decreased dependence of Asian economies on the developed markets for trade.

In contrast to the encouraging scenario above, the developed world has been plagued by slower economic growth (EU) and jobless economic recovery (US). This has been the primary cause for the lackluster performance of the developed markets in 2004 so far. In case of the US, another reason affecting sentiments is the growing deficit (more than US$ 500 bn) of the US economy, which has put to question the various tax incentives announced by the Bush administration. Now, as far as the Indian stock markets is concerned, the subdued performance can be attributed to a slew of domestic developments, primary of these being the uncertainties with respect to the forthcoming general elections, as it would be a key determinant in the continuance of the current reforms process underway in the economy.

However, though the Asian stock markets have registered astonishing gains in 2003 and have continued with their performance in 2004, they look attractive even at current valuations. Majority of the Asian economies (including India) are currently trading in the region of 14 times to 17 times their 2004 earnings, which is relatively attractive compared to the P/E valuations of developed economies currently trading in their early twenties (20 times). Thus, to conclude, though there may be bouts of volatility in the short-term, the Asian growth story (including India) remains intact.

Equitymaster requests your view! Post a comment on "World Indices 2004 - A check". Click here!

  

More Views on News

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

ONGC to NMDC: Here are 5 Stocks Value Investors Should Closely Track (Views On News)

Nov 26, 2021

Before investing in value stocks, research the company and gain insight into why the market is discounting it.

Top 5 Stocks FIIs Bought and Sold Recently (Views On News)

Nov 25, 2021

FIIs have largely stayed on sidelines for the past few months, withdrawing money across emerging markets.

Everything to Know About the Upcoming Tega Industries IPO (Views On News)

Nov 27, 2021

Are you looking to apply for the Tega Industries IPO? You must ensure that you know specific details.

3 Charts on Why the Indian Bull Looks Tired podcast (Views On News)

Nov 27, 2021

Rahul Shah explains the key reasons behind his pessimistic outlook on the stock market.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Nov 26, 2021 (Close)

MARKET STATS