Friday, January 01, 2021 /01:20 PM by BukunmiAdejobi, Proshare Research/ Header Image Credit: Pexels

The year 2020 broughta rapid and unpredictable change to global economies and stock markets with anunprecedented health crisis that disrupted markets throughout the year. As the COVID-19pandemic escalated, the year was characterized by a fall in oil prices and the Russia-SaudiArabia oil tiff.

Analysts note thatthe year 2020's 'Coronavirus Crash' was a major market tumble that began on the20^th February 2020. With several businesses remaining operationally comatoseover the period, labour became the whipping boy as companies laid off workerslike nine pins. Consequently, there was a sharp reduction in consumption andoutput, resulting in corporate revenues tanking. During the crash stockprices and stock markets went into freefall; Central Banks globally startedquantitative easing ('QE') and governments primed fiscal pumps as they tried tostave of recessions.

The hospitality, Oil and Gas, tourism, transport,Construction/Real Estate, and retail sectors were hardest hit, while some sectorswere mildly affected by stock price declines. Sectors that proved to becountercyclical were- technology and software, essential goods, and consumer goods.Technology stocks benefitted fromthe positive outlook of increased earnings as consumers worked from home, spenttheir money online as e-commerce platforms saw revenue surge. The decline ingovernment bond yields supported technology stocks as investors considered themas hidden value opportunities or growth stocks expected to increase their earnings over the mediumto long-term.

 

At the end of Q2 2020, economies globally startedopening up after the Q1 lockdown. Rising fiscal stimulus, lower interest rates,and broader Central Bank interventions added liquidity which propped equitymarkets up. The global fiscal interventions boosted confidence and supportedequity markets in  the US, Europe andAsia.

Emerging markets such as Thailand, Chile, Brazil, andthe Philippines were not left out the anti-recession dogfight. These countriestoo saw their governments go deeper into debt to support economic growth. The impactof COVID-19 on global economic growth differed across markets, but weaknessesof emerging or frontier economies were exposed as fiscal deficit, foreigncapital dependence, and contraction of GDP weighed heavily against weakereconomies. As countries navigate new paths to recovery, emerging markets seemresolute in reaching points of economic revival.

 

Top Five PerformingStock Markets In The World

 

America(NASDAQ Composite Index and The Breakout Of Tech Stocks In 2020): 42.74%

The NASDAQ is thesecond-largest stock and securities exchange in the world, behind only the New York StockExchange (NYSE), the NASDAQ attracts some of the largest blue-chip companies globallywith representatives from high-tech software, hardware computer, and internet servicecompanies such as Apple, Amazon, Microsoft, Intel, Cisco Systems and Netflixpresent on the Exchange, although other industries have representatives on NASDAQas well. The NASDAQ Index tends to be more volatile and growth-focused thanother Indexes because it has a higher composition of growth-oriented companies.

The tech-heavyNASDAQ topped Proshare's list of gainers in 2020. The industry's biggestplayers: Amazon, Apple, Facebook, Alphabet, and Microsoft weresomewhat well placed to rise to the challenges of the coronavirus pandemic asthe virus accelerated digitalization around the world.

For example, ZoomTechnologies Inc, the go-to video conferencing platform during thepandemic, so its tsock price go up by +464% from US$68.04 on 31 December 2019 to US$383.88 as of 23December 2020.

Theoverall NASDAQ Index closed the year up by +42.74%to 12,807.92 points as of 22 December 2020 from 8,972.6 points recorded on 31December 2019.

 

America(S&P 500)

America's S&P 500  indexclosed the year in the green with a growth of  +14.13% from 3,230.78 points as of 31 December 2019to 3,687.26 points on 22 December 2020. the biggest movers for the S&P were stocks in the MedicalSpecialties, InformationTechnology Services, Semiconductors, Data Processing Industries such as NvidiaCorporation, Paypal Holdings.

The recent signing ofa coronavirus aid bill and rollout of vaccines have increased expectations that the economy will quicklyrebound from the pandemic, fueling gains in the market. 

 

South Korea (KOSPI Composite Index): +26.79%

The KOSPI index stood outin 2020 compared to other Exchanges across the Asia Pacific, South Korea's KOSPIIndex recorded the highest gain Y-o-Y ahead of the Nikkei 225, ShanghaiComposite Index, Taiwan Weighted Stock Index and, Bursa Malaysia (KLSE). The indexgained +26.79% to close at 2,759.82 points on 22 December 2020 from 2,176.67 pointsrecorded on 31 December 2019. 

 

Asia being one of the major epicenters of the coronavirus pandemic, SouthKorea's GDP rebounded by +2.1% in Q3 2020after contracting by -3.2% in Q2 2020 ridingon its weakest growth amid the pandemic. The country's exports, which accountsfor half of the economy rebounded on the back of semiconductors and chipmakers(the second largest in the world) as the South Korean government pushed formore development in Artificial Intelligence (AI).

 

This move came at the right time as countries sought the need to ramp updigitization and tech stocks around the world recorded a surge in share prices.The KOSPI Index saw increased valuations based on a potential increase inearnings in 2021 therefore, more healthcare stocks and batterystocks became large caps.

 

Taiwan (TheTaiwan Weighted Index): +18.55%

The TaiwanWeighted Index grew by +18.55% from 11,997.14 points it closed aton 31 December 2019 to 14,223.09 points. The global forecast for the Asianmarkets has been cloudy, with coronavirus concerns offset by vaccine optimism.This year, with the rise in technology stock prices, the Taiwan Exchange has been a majorbeneficiary as investors sought safety in companies such as semiconductor producers.The Exchange also befitted from a slew of liquidity resulting from QE, however,the Central Bank's stricter mortgage rules left buying interest in the home purchasemarket in the dumps.

TaiwanSemiconductor Manufacturing Company (TMSC) the most heavily weighted stock onthe market with other bellwether tech heavyweights experienced increasedinvestor sentiment as investors looked for where to put their money. TMSC shareprice rose by +53.96% from 334.50TWD on 30 December 2019 to 515TWDas of 28 December 2020.

 

China (SSE 180Index - Shanghai): +14.29%

The Shanghai StockExchange grew by +14.29% to 10,254.81 as of points from8,972.92 points on 31 December 2019. Despite prevailing uncertainties marked bythe COVID-19 outbreak, as well as political, social, and economic concerns inChina the markets have seen a string of initial public offerings (IPOs) and an intenserally in share prices of consumer and technology companies. One of the reasonsfor the performance of the Exchange is the overall resilience of China as itbecame the first major economy to return to post-coronavirus growth, thisshored up confidence in the equities market. Stocks of internet groups,Technology such as Tencent Holdings have surged as consumers pivoted to onlinelifestyle during the pandemic (E-commerce, Technology, Food Delivery,Health-Tech, Gaming).

 

TheChina IPO market has seen increased listings in 2020 despite the economicchallenges on the back of global investor demand for growth stocks; liquidityavailable from government stimulus policies, coupled with the US-China tradetensions, have caused more Chinese companies to seek primary or secondarylistings on the Chinese Exchanges.

 

Shanghai,Shenzhen, and NASDAQ Exchanges led by deal numbers in Q3 2020, accounting for54% of global IPOs. Shanghai dominated global exchanges by proceeds in Q3 2020,accounting for 25% of global IPO proceeds, Technology, health care, andindustrials were the most active sectors on these four exchanges. YTD 2020's largestlistings included the listing of Semiconductor Manufacturing InternationalCorp. (US$7.5b) on the Shanghai STAR Market, JD.com Inc. (US$4.5b) on the HongKong Stock Exchange.IPOactivity in Asia-Pacific is on track to well-exceed 2019 volumes and proceedson the back of some mega transactions completed and in progress" according to areport by Ernst & Young on Global Ipo Trends in Q3 2020.

 

Top Five LowestStock Markets Performance In The World

 

Austria (ATX) : -15.04%

The ATX topped the list of laggards in 2020. The Austrian TradedIndex is a capitalization-weighted index of the most heavily traded stocks onthe Vienna Stock Exchange, as of 2019 the exchange comprised of 20 stocks. Theindex recorded the highest losses with a -15.04%decline from 3,186.94 points on 31 December 2019 to 2,707.52 points as of 22December 2020. The decline of the ATX index was affected by the cyclicalcomponent of heavy-weight stocks in the financial, oil, and steel sectors listedand are currently causing a downturn, whereas in an economic recovery thestocks have a high potential for a rebound.

United Kingdom (FTSE 100): -14.44%

Britain was in the eye of the coronavirus storm as restrictions ontraffic between the UK and other countries raised the pressure on supply chains,Brexit uncertainty, coupled with fresh lockdowns to prevent the new strain ofcoronavirus sweeping across southern England from spreading to the continentweighed on the capital market. The FTSE 100 ('Footsie') suffered its worst yearsince 2008,  it declined by -14.44%from 7,542.44 points on 31 December 2019 to 22 December 2020.During the market crash in February where global markets were at an all-timelow, heavy falls were followed by a massive selloff on the bourse in March asinvestors braced for a recession. The FTSE 100 lagged and has since beenplaying catch-up. The British market has a high concentration of cyclicalstocks in the Oil and Gas, Industrial, Financial Services, and Constructionsectors which stalled the recovery. During the year, there was still a greatdeal of uncertainty about the future path of the market,with fresh lockdowns and disruption posing a major threat but areversal flickers on the horizon.

While the Footsie is still down 14% Year-to-Date,it has seen a steady rise in December and received a recent boost after a tradedeal with the EU was reached and another vaccine was approved.

 

Singapore (Straits Times Index): -12.67% 

The Straits Time Index declined by -12.67% to 2,827.81points ON 22 December 2020 from 3,238.07 as of 31 December 2019. It is a capitalization-weighted stock Index thatis regarded as the benchmark Index for the Singapore stock market. It tracksthe performance of the top 30 companies listed on the Singapore Exchange.The major contributing factor to the decline is the component of the stockslisted; the stocks are pro-cyclical in composition representing real estate, financialServices, and manufacturing sectors which took major hits during the pandemic.

 

Belgium (Bel 20): -8.80%

The BEL 20 is a free-float market capitalization-weighted indexthat reflects the performance of the 20 largest and most actively traded shareslisted on Euronext Brussels and is the most widely used indicator of theBelgian stock market. The index had its share of downturns as a result of thepandemic which slowed down economic activities, the index fell to a low of2,528.77 points in March 2020 from 3,967.18 points in January 2020 thenrecovered in June to 3,540 points. Although the index is lagging in termsof recovery compared with other indices, the Bel 20 proves resilient as itstruggles to rebound to pre-pandemic levels. Year-to-Date, the index declinedby -8.80%.

 

France (CAC 40): -8.55%

The CAC 40 is a free-floatmarket capitalization-weighted index that reflects the performance of the 40largest and most actively traded shares listed on Euronext Paris and is themost widely used indicator of the Paris stock market. the Paris bourse ends the year in redwith a -8.55% decline in 2020 to 5,466.86 points as of 22 December 2020 from 5,978.06 points on 31December 2019.

French stocks tumbled this year as Francedealt with its share of coronavirus concerns with over 2 millioncases and 190,00 deaths in the country,  lockdown measures, uncertaintiesabout the Brexit negotiations and economic downturn weighed in on the market.

 

Stock markets in Europehave been the laggards in 2020 but saw renewed optimism after European Union (EU) officials and British lawmakers approved aseparation deal that will govern trade and other relations from 2021 in addition to the new roll-out of vaccines  helpingboost sentiment and spur the markets to recovery in the near term. the outlook for the French index in the daysahead is optimistic.

 

Exchange	Country	31-Dec-19	22-Dec-20	% Change
Nasdaq	USA	8972.6	12807.92	42.74%
KS11	South Korea	2176.67	2759.82	26.79%
Taiwan Weighted	Taiwan	11,997.14	14223.09	18.55%
SSE 180 Index (Shanghai)	China	8972.92	10254.81	14.29%
S&P500	USA	3230.78	3687.26	14.13%
Nikkei 225	Japan	23656.62	26524.79	12.12%
NIFTY	India	12182.5	13466.3	10.54%
SSE Composite Index (Shanghai)	China	3084.69	3378.35	9.52%
MICEX Index	Russia	3050.47	3236.46	6.10%
Dow Jones Ind. Avg.	USA	28538.44	30015.51	5.18%
^KLSE	Malaysia	1595.83	1640.56	2.80%
S&P/TSX Composite Index	Canada	17098.56	17500.89	2.35%
AEX General	Netherlands	604.58	617.5	2.14%
DAX	Germany	13249.01	13418.11	1.28%
All Ordinaries	Australia	6810	6892.6	1.21%
Bovespa	Brazil	115645.34	116636.18	0.86%
All Share	Sri Lanka	6318.21	6318.21	0.00%
IPSA	Chile	5058.88	5058.88	0.00%
Madrid General(IGBM)	Spain	1142.35	1142.35	0.00%
MIBTel	Italy	15743	15743	0.00%
TA-100	East Isreal	1292.38	1292.38	0.00%
Swiss Market Index	Switzerland	10616.94	10403.37	-2.01%
IPC	Mexico	43541.02	42601.71	-2.16%
^JKSE	Jakarta	6271.11	5996.71	-4.38%
Hang Seng	Hong Kong	28499.5	26280.24	-7.79%
MerVal	Argentina	41671.41	38390.84	-7.87%
S&P/MIB Index	Italy	25890.37	23787.23	-8.12%
PSEi	Phillipines	7839.79	7202.39	-8.13%
CAC 40	France	5978.06	5466.86	-8.55%
BEL-20	Belgium	3955.83	3607.72	-8.80%
Straits Times(STI)	Singapore	3238.07	2827.81	-12.67%
FTSE 100	UK	7542.44	6453.16	-14.44%
ATX	Austria	3186.94	2707.52	-15.04%

 

As2021 shuffles in, there is mild optimism that global equity markets will beginto edge up as supply chains become restored, manufacturers increase salesvolumes and workers get back to their jobs on the back of a COVID-19 vaccinethat would likely cover most of Europe and America by Q2 2021 and othercontinents between Q3 and Q4 2021.

 

WithCOVID-19 pandemic kept in check global GDPs are expected to rise steadily andstock markets are expectedly to roar a little louder, with bulls mauling bears,but only mildly.

 

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