How Have Global Indexes Held Up So Far?

Jul 8, 2008: 10:23 AM CST

It’s time to broaden our perspective and view the major market indexes from countries around the world.  How have they performed since the October 2007 US Stock Market Peak?  Let’s review the percentage comparison for insights.

Since the October preak, only Brazil ($BVSP) has held its own, and has now turned negative from the peak after being up as high as 20%.  Brazil is driven largely as a commodity export country, so a large percentage of its performance is due to the price of commodities, which have been remarkably strong until recently.

On the other hand, China ($SSEC), a largely importer country of commodities, has seen the worst performance listed on the chart above, plunging 50% from its 2007 peak.  What would the Federal Reserve and average Americans be saying or doing if the S&P 500 index fell 50% in less than a year?

Keep in mind that the Chinese are hosting this summer’s Olympics, so this development is very interesting given the expectation of large capital inflows from around the world as tourists and spectators visit and pump money into various sectors of the economy – or are the Olympics not as profitable as they have been for countries in years past?

Nevertheless, the French, German, and British indexes have performed very similarly to the S&P 500, with Great Britain ($FTSE) holding up the best (losing only 15% to the S&P’s 20%) and France ($CAC) performing the worst (losing 25%).  The relative performance of these selected countries has been right in line with the S&P for the duration of this chart.

As a bonus, let’s look at the best performer in the graph (Brazil) and compare it to the worst performer (China):

Brazil:

China:

Although many global indexes perform similarly to the US Stock Market, others clearly do not.  You can find opportunity (and risk as well) by diversifying abroad into global market ETFs and stocks.

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