Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

29 August 2025

Home / 229

Stock market winners 10 years on

It has been 10 years since the end of the 2003-2007 global China/credit boom, and it is time to check in on how stock markets have fared since then. The left chart ranks countries by their broad share price index growth over the past decade. Only 36 of the 62 main stock markets are ahead of their pre-GFC highs. The right chart shows average economic growth rates per country over the same period, in the same country order as the market performance, to demonstrate if economic growth relates to share price growth.

Among the ‘developed’ markets, Denmark won the gold medal in January 2013 for being the first stock market to surpass its pre-GFC peak, and it is now 126% ahead (i.e. more than double its pre-GFC peak). The silver medal went to the US in March 2013 and bronze went to the UK in May 2013. [See previous articles, Stock market Olympics, and the winners are and Australia can learn from gold medal winner, Denmark].

As usual there has been no statistical relationship between economic growth and share prices when measured across countries. Australia has been the so-called ‘miracle economy’ with the strongest long-term economic growth rate in the ‘developed’ world, and it did not even suffer an economic recession in the GFC, thanks to a deficit spending spree our grandchildren will be paying off. Yet the local stock market index (in price terms, not accumulation including dividends) is still behind its November 2007 high.

In contrast, the US, UK, Western Europe, Canada and even New Zealand suffered far lower economic growth rates in the GFC and over the past 10 years, but they have generated much stronger share prices than Australia. Denmark, the stand-out gold medallist stock market in the developed world, has had virtually no economic growth over the past 10 years. At the other end of the scale, China had the fastest economic growth rate over the past decade (and the largest aggregate growth in human history) but has had one of the worst stock markets.

Another common feature is that countries with the strongest stock markets often suffer political, economic or social turmoil and this was the case again - e.g. Argentina, Venezuela, Pakistan, Philippines, Turkey and Mexico.

There are many reasons for differences in share prices in different countries of course, but this quick snapshot is a useful reminder of the folly of focusing on economic growth as a pointer to share prices.

 

Ashley Owen is Chief Investment Officer at advisory firm Stanford Brown and The Lunar Group. He is also a Director of Third Link Investment Managers, a fund that supports Australian charities. This article is general information that does not consider the circumstances of any individual.

 

6 Comments
Phil
January 28, 2018

Is 10 years really long enough for it to be statistically sound. The article uses the word statistical basis. It's one period and correlations can change depending on a number of other variables, not just GDP.

Albert
January 28, 2018

True that GDP does not correlated with Stock returns. Markets rise and fall.

Some points to note :
1. Few of us would invest in countries like uninformed, poorly developed, small third world markets - so this is largely irrelevant in our investable universe.

2. We need to have a large investment in our locale of domicile to match risk and liability/needs. Yes, we can hedge currency but there is a cost to wear which comes off your long term return.

3. Given that we invest in largely open and efficient markets the long term returns will equalise i.e. investors will appropriately price high vs low growth stock markets resulting in rational returns for risk. Overseas have done well for now but this will change too.

ashley
November 30, 2017

hi Chris -
regarding inflation - i also measure each market after its domestic inflation.
In addition I also measure each in terms of AUD returns on both a hedged AUD basis and un-hedged AUD. So there are dozens of ways of measuring returns.
For the above story I used the domestic nominal returns in each country in the local currency of each country - in order to show what the stock market for each country did for local investors in that country - because most investors have a heavy 'home bias' and think primarily about their own market in their own currency when then think about shares.
So back to returns after inflation - Australia actually does considerably worse on real returns because our inflation rate is significantly higher than other developed world markets - eg Europe, US, UK and Japan.
Cheers
Ashley

Chris Jankowski
November 30, 2017

It looks to me that the results reported for the two top places - Venezuela and Argentina are completely bogus. Both of these countries had periods of uncontrolled and under reported high inflation. The simplistic comparison most likely ignores that.

By these standards the undisputed leader, had it been reported, would certainly be Zimbabwe.

ashley
November 30, 2017

hi mark

Adding dividends (and even adding franking credits) doesn't get the ASX anywhere near the leaders. ASX total returns including divs only gets us +37% ahead of its 2007 high.
And adding franking credits as well only gets it to +62% above the 2007 high. That is still below the S&P500 PRICE index which is +66% ahead (before dividends), and it is still some 40% below the S&P500 total return index including US dividends.
(and Aust is also still behind other major markets like Japan, UK, Germany and even NZ on a total return basis)

cheers
ashley

Mark Higgins
November 30, 2017

Think you need to factor in our high dividends - eg the all odds Accumulation Index - then we are ahead.

 

Leave a Comment:

RELATED ARTICLES

GFC and personal reflections, 10 years on

Podcast: What did you do during the GFC? Warning signs and lessons for investors

The ASX's 16-year drought: a rebuttal

Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

Latest Updates

Economy

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Investing

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Property

Australian house price speculators: What were you thinking?

Australian housing’s 50-year boom was driven by falling rates and rising borrowing power — not rent or yield. With those drivers exhausted, future returns must reconcile with economic fundamentals. Are we ready?

Shares

ASX reporting season: Room for optimism

Despite mixed ASX results, the market has shown surprising resilience. With rate cuts ahead and economic conditions improving, investors should look beyond short-term noise and position for a potential cyclical upswing.

Property

A Bunnings play without the hefty price tag

BWT Trust has moved to bring management in house. Meanwhile, many of the properties it leases to Bunnings have been repriced to materially higher rents. This has removed two of the key 'snags' holding back the stock.

Investment strategies

Replacing bank hybrids with something similar

With APRA phasing out bank hybrids from 2027, investors must reassess these complex instruments. A synthetic hybrid strategy may offer similar returns but with greater control and clearer understanding of risks.

Shares

Nvidia's CEO is selling. Here's why Aussie investors should care

The magnitude of founder Jensen Huang’s selldown may seem small, but the signal is hard to ignore. When the person with the clearest insight into the company’s future starts cashing out, it’s worth asking why.

Sponsors

Alliances

Site Map

About Firstlinks

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.