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

An Important Hurricane Update for Energy Traders (Fast Profits Daily)

Sep 22, 2020

In this video, I'll show you how the extended hurricane season in the US will affect traders in crude oil and natural gas.

Mutual Fund Investors Will Now Be Allotted Units Based on NAV of the Day AMCs Receive Funds (Outside View)

Sep 22, 2020

PersonalFN explains how SEBI's new circular on mutual funds impact investors.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

How Much Money Should an Investor Set Aside for Trading? (Fast Profits Daily)

Sep 21, 2020

In this video, I'll give you a simple equation which you can use to decide how much money you can set aside for trading.

Kotak Standard Multicap Fund: Strategizing Growth with Focused Approach (Outside View)

Sep 21, 2020

PersonalFN's analysis on the features and performance of Kotak Standard Multicap Fund.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why am I Recommending Caution? (Fast Profits Daily)

Sep 9, 2020

This is why I have changed my short-term view on the market.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 22, 2020 (Close)

MARKET STATS