Morgan Stanley and Capital Group developed and maintain the MSCI World Indexes - equity indexes for every country and every region globally. The indexes are a wonderful tool allowing Portfolio Managers to construct an easy-to-beat currency-adjusted global benchmark so that they can get paid a big bonus at the end of the year.
I was looking through the global regional (Far East, EAFE, North America...) indexes this morning and they are all down between 35% and 48%. All 31 regions, any way you slice it. Down by at least 1/3.
I was wondering what is going to change to allow a region to dramatically outperform and then it struck me. Austria, Russia, Indonesia and Iceland have all closed their equity markets. Brilliant. Today is going to be a good day for them at least. Unless they all shut down we should get somewhere.
On a related note, all regions are also down on a 3-year basis. The best region over the last 3 years for equity investors? Asia Ex-Japan at -2.7%/yr. Go China etc.
The worst? North America at -8.1%/yr. Non-leadership. A lot of the under performance can be attributed to the woeful swoon in the dollar but I'm not going to do that math right now. My point is that once global credit market gets their footing, I would expect our markets to outperform most over a sustained period.
OK everybody, get back under your desks.