Remark: you may also want to check out our previous 2012 Year-end Financial Review).
Below let us start listing our 2013 financial markets performance review, including global stock markets, commodities markets, foreign exchange (forex) markets, bond markets:
(A) 2013 Equity Markets Performance Review:
We have made a simple table summarizing the overall 2013 annual performance of key stock markets in the world:
|Name of Equity Market Index||Annual Change (in Percentage)||Country/Region|
|S&P 500 Composite||+29.6%||USA|
|DJIA (Dow Jones Industrial Average)||+26.5%||USA|
|SX All Share||+23.2%||Sweden|
|Johannesburg All Share||+17.8%||South Africa|
|Kuala Lumpur Composite||+10%||Malaysia|
|S&P BSE Sensex||+9%||India|
|Hang Seng HSI||+2.9%||Hong Kong|
|Straits Times STI||+0.01%||Singapore|
|PX 50||-4.8%||Czech Republe|
|Shanghai SSE Composite||-6.7%||China|
|Sao Paulo Bovespa||-15.5%||Brazil|
To sum up, it is quite clear that most 2013 top earners were in developed countries. Japan Nikkei 225 Index rose by +56.7% YoY in 2013 and became the global winner of the year. U.S. markets such as NASDAQ Composite, Russell 3000, benchmark S&P 500 Composite or DJIA (Dow Jones Industrial Average) also performed well in 2013. On the other hand, the top loser was Chile Santiago IPSA, which fell by -15.8% YoY. Other emerging markets such as Brazil Sao Paulo Bovespa, China Shanghai SSE Composite, Thailand SET or Russia RTS are performed extremely week in 2013. The only exception for emerging markets was Pakistan KSE 100 Index, which gained by + 49.4% YoY and ranked the world number two just after Japan.
Thus you may immediately see some investment opportunities for emerging markets in 2014 if if you believe these markets will bottom out and rebound.
Generally, we can say global stock markets did quite well on average in 2013, as DJ Global Index (World) increased by +20.8% throughout the year.
(B) 2013 Commodity Markets Performance Review:
2013 was a mix year for overall commodity markets. The best-performed commodity of previous year was Propane (spot), which rose massively by +42.4% YoY in 2013. The worst-performed commodity of previous year was Silver (London spot fixing), which dropped heavily by -36.3% YoY in 2013. Below please see our brief summary for 2013 global commodity markets performance:
(i) Energy Market Annual Review
Propane (spot in Texas) was the clear winner in 2013, as it rose by +42.4% YoY. Natural gas (Transco Zone 3, per Mmbtu-I) also performed well and continued to rise by +27% YoY, representing its best-performed year actually since 2007.
(ii) Precious Metals Market Annual Review
2013 was generally a bad year for precious metals. Gold (London spot fixing) eventually finished at USD$1202 per ounce, representing a heavy -27.8% YoY loss in 2013. This officially ended its bull market which lasted already for 12 consecutive years. Silver (London spot fixing) performed even worse and finished at USD$19.5 per ounce equivalent, representing a massive annual loss of -36.3% YoY. Platinum (Engelhard industrial bullion) also dropped by -11% YoY, while Palladium (Engelhard industrial bullion) performed better and gained by +1.1% YoY in 2013 on relatively tighter supply.
(iii) Base Metals Market Annual Review
Copper (Comex spot) eventually lost by -5.5% YoY in 2013. Iron Ore (62% Fe CFR China-S) also dropped by -7.4% YoY.
(iv) Agricultural-Based Commodities Market Annual Review
Corn (gluten feed) lost by -19% YoY at end-2013. Wheat (Spring) also dropped by -9.2%. Cocoa (Ivory Coast) and Soybeans, however, continued their up-trends and gained by +21.7% YoY and +12.7% YoY respectively. Cotton prices also successfully rebounded and gained by +15% YoY.
(C) 2013 Currency Markets Performance Review:
In currency (foreign-exchange) markets, Euro (EUR) rose by +4% YoY against USD and became the strongest major currency in 2013. Japanese Yen (JPY), on the other hand, crashed by -21.4% YoY against USD in 2013 and became the weakest-performed major currency of the year. Thus making USD the largest annual gain against JPY since 1979, owing to the Japanese Shinzo Abe government continued to execute quantitative easing policies that promote weaker Yen (JPY) exchange rate.
For other currencies, the best performer was Israel Shekel (ILS), which rose by +7% YoY against USD. Chinese Renminbi (RMB or called Yuan) gained over +2% YoY against USD and thus also performed quite well. The top loser of the year was Venezuela Bolivar Fuerte (VBF), which tumbled by -46% YoY against USD. Argentina Peso (ARS), Indonesia Rupiah (IDR) and South Africa Rand (ZAR) were also very weak, as they dropped significantly by -32.6%, -26.2% and -24% YoY respectively against USD.
So forex investment opportunities are still there in 2014, because some very weak non-major currencies will likely to rebound after the current round of sell-off.
(D) 2013 Bond Markets Performance Review:
U.S. Treasury market performance was sharply affected even before the QE (quantitative easing) exit decision of U.S. Federal Reserve last December. As the treasury market already expected this QE exit, yields of 30-year U.S. government bond continued to increase (from 2.95% to 3.96% by end-2013), while 10-year U.S. government bond also bottomed out and turned to rise (from 1.76% to 3.03%). It clearly indicated that longer-term U.S. inflationary expectation did already build up.
In Europe side, yields of PIIGS government bonds continued to fall in 2013, indicating that market fear of Eurozone sovereign-debt crisis did continue to ease. Thanks again to bailout plans of International Monetary Fund (IMF) and European Union (EU), Ireland successfully became the first of PIIGS nations to head out technically from Eurozone sovereign-debt crisis. By end-2013, yeld of 10-year Ireland government bond fell from 4.5% to 3.5%. Yield of 10-year Greek government bond continued to fall from 11.9% to 8.6%. Yield of 10-year Portugal government bond also dropped from 7% to 6%. Yields of 10-year government bonds for Spain and Italy dropped as well to 4.14% (from 5.27%) and to 4.1% (from 4.5%) respectively. Although Germany treasury note was still the safe-haven for Europe and the number-one bond of previous year in Eurozone, yield of 10-year Germany treasury note had bottomed out in 2013 and started to raise to 1.94% from 1.3% by end-2013, mainly affected by the tightening of U.S. monetary policy.
So the trend is quite obvious. If you believe that U.S. economy will continue to recover, bond yields of core countries such as Germany or U.S. itself will still rise up. Investment opportunities are still there because U.S. Federal Reserve has just been started reducing its asset purchase size but not yet begins cutting benchmark interest rates.
Additional Financial Markets Review For Each Year: Complete List of Financial Markets Review.