Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 47

Global stock markets in 2013

In 2013 stock markets around the world continued their rebound that began in late 2011 and early 2012, following the 2011 dip that was triggered by the European banking and debt crisis and the US credit downgrade. In 2013 the only minor dips for global stock markets were the Cyprus bank bailout crisis in March and the QE taper scare in May-June.

Our first chart shows the global total return index (including dividends) in US dollars since 2005:

The following charts show broad stock market indexes for the main global markets for 2012 and 2013:

In 2011 earnings and dividends were up in most countries but stock market indexes were down almost everywhere.

In 2012 earnings were down in most markets and dividends were flat or down in most markets, but market indexes were up almost everywhere.

In 2013 almost all developed markets were up, although earnings were weak and their economies were still on life support in intensive care wards, supported by extremely loose fiscal and monetary policies. Meanwhile, the far more fiscally sound and faster growing large emerging markets were suffering the effects of domestic slowdowns, rising inflation and poor equity returns.

Developed Markets

The 2012-2013 rally was led by the big industrial giants - US, Japan and Germany - driven in each market by cyclical companies such as industrials, retailers, media and banks.

European markets showed a pronounced divergence between the so-called ‘industrious’ north and the so-called ‘profligate’ south.

Despite this divergence, virtually all European markets rebounded strongly in 2013 (apart from Cyprus and Slovenia with their banking crises). Even Greece has rebounded strongly since its first and second bailout, as it heads for yet another bailout.

Emerging Markets

(Note the vertical scales on the charts for developed markets and emerging markets are very different in order to show the much larger swings in the emerging markets. All emerging markets except Taiwan have outperformed the developed markets and Australia by big margins through the pre-GFC boom, through the GFC itself, and in the post-GFC recovery.)

The worst of the main emerging markets have generated similar returns to the best of the main developed markets over the period, so if all markets were shown on the same chart, all of the emerging markets (aside from Taiwan) would appear above the best of the developed markets.

Emerging markets have been much more volatile and have been very vulnerable to the ‘hot money’ effect as money rushes in and out of global markets in ‘risk on/risk off’ swings. We saw this in the capital flight in the wake of the May-June 2013 Bernanke QE scare, and again in December as the QE taper plan was finally announced.

The south-eastern Asian markets were hit hard in the global capital flight due to the QE taper scare but most are far better placed now than they were when the 1997 Asian currency crisis hit.

As in Europe, there is a diversion between north Asian markets (driven largely by China) and South-East Asian markets (which are less reliant on the China supply chain). This is very evident in the following pair of charts:

In 2013, as in the past few years, the BRICs (Brazil, Russia, India and China) were the laggards, with their slowing economies, inflation problems and highly concentrated stock markets dominated by state-controlled enterprises.

The term ‘BRIC’ was a brilliant marketing gimmick invented by Goldman Sachs ten years ago to sell stocks and consulting services. However the BRIC markets have generally been a disaster for investors. As investors, we see the BRIC phenomenon more in line with the J P Morgan term: ‘BRIC: Bloody Ridiculous Investment Concept’.

Our consistent advice for investors over the past several years has been: “The further away from China you are the better”.

 

Ashley Owen is Joint Chief Executive Officer of Philo Capital Advisers and a director and adviser to the Third Link Growth Fund.

 

  •   31 January 2014
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

Prefer or defer? Sector and investment themes for 2021

Highlights of Cuffelinks 2013

banner

Most viewed in recent weeks

Making sense of record high markets as the world catches fire

The post-World War Two economic system is unravelling, leading to huge shifts in currency, bond and commodity markets, yet stocks seem oblivious to the chaos. This looks to history as a guide for what’s next.

3 ways to fix Australia’s affordability crisis

Our cost-of-living pressures go beyond the RBA: surging house prices, excessive migration, and expanding government programs, including the NDIS, are fuelling inflation, demanding bold, structural solutions.

Is there a better way to reform the CGT discount?

The capital gains tax discount is under review, but debate should go beyond its size. Its original purpose, design flaws and distortions suggest Australia could adopt a better, more targeted approach.

How cutting the CGT discount could help rebalance housing market

A more rational taxation system that supports home ownership but discourages asset speculation could provide greater financial support to first home buyers.

Welcome to Firstlinks Edition 648 with weekend update

This is my last edition as Editor of Firstlinks. I’m moving onto a new role though the newsletter will remain in good hands until my permanent replacement is found.

  • 5 February 2026

It’s economic reality, not fear-based momentum, driving gold higher

Most commentary on gold's recent record highs focus on it being the product of fear or speculative momentum. That's ignoring the deeper structural drivers at play. 

Latest Updates

Superannuation

Super is catching up, but ageing is a triple-threat

An ageing Australia is shifting the superannuation system’s focus from accumulation to the lifecycle of retirement. While these pressures have been anticipated for decades, they are now converging at scale and driving widespread industry change.

Investment strategies

Corporate earnings show resilience against volatility but risks remain

Evidence for a strong reporting season had been piling up for months and validated an upgrade cycle already underway. However, risks remain from policy uncertainty.

Superannuation

Want your loved ones to inherit your super? You can’t afford to skip this one step

One in five Australians die before retirement and most have not set up their super properly so their loved ones can benefit from all their hard work and savings. 

SMSF strategies

Sixteen steps in a typical SMSF borrowing

Getting a mortgage is never an easy process but when an investment property is purchased in a SMSF the complexity increases significantly. Read this before taking the plunge. 

Planning

Do HNWI get better advice?

Good advisers lead to more diversification, lower turnover and less home bias. However, studies show the average adviser may not be adding much value to clients. 

Strategy

AFL Final Ten with wildcard edit 'unlevels' the field

When the new AFL season kicks off a wild-card will be added to the finals. Is this new formula fair and how does it impact the odds of winning the premiership.

Planning

Love them or hate them, it's worth understanding annuities

Investors have historically balked at exchanging a lump sum for a future steam of income. Breaking down the financial and emotional considerations of purchasing an annuity.        

Sponsors

Alliances

© 2026 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.