For all the tension in the world, stock markets around the globe have shown no trouble climbing. Call it well-founded optimism or a blatant disregard for risk, but whatever the correct the label it’s clear that 2006 is proving to be a good year for equities. Whether the trend continues remains to be seen, but it’s hard to argue with the results so far. Indeed, it’s only March and many investors are sitting on tidy gains already.
The 29 regional/world benchmarks in the S&P/Citigroup Global Equity Indices series, for example, all show increases this year through March 13. That’s on top of robust advances last year. Although there’s a fair amount variation in the total returns, depending on the market, it’s been hard to lose money by spreading assets around the world.
The best performer this year in dollar-based terms through March 13 among the regional/world indices from S&P/Citigroup is European Emerging, soaring 17.32% on a total return basis so far. The bottom performer is Asia Pacific, although it’s still in the black year-to-date by 1.64%.
There may be room to run further in global equity markets, to judge by some of the more optimistic commentators of late. Indeed, the fear of the moment in the bond market is that economic growth may be stronger than the fixed-income set expected–news that, in contrast, tends to inspire buying among equity investors.
Nonetheless, with everything bubbling in stocks in broad terms, now seems like an opportune moment to find out which corners of the globe look pricey, and which ones are in the running for offering a bit more value. As always, that’s a tricky call, and subject to a wide variety of misleading conclusions. Indeed, there’s no sure-fire method for deciding if stocks are priced to run, crash or tread water. What’s more, the immediate future is vulnerable to so-called exogenous threats, which is to say that something out of left field that no one expected, and that has no relevance in financial analysis, could throw a wrench in the machine.