Hindsight has now told us the biggest mistake in 2017 was not to be invested to the gunwhales in global markets.
Almost anywhere you put your money you made more of the green stuff, and in some cases spectacularly so.
Investors refused to be distracted by economic uncertainties, political unease and incessant tweeting from the new US President and piled into the world’s markets.
Fill your boots with tech and online retail
When the Dow Jones Industrial Average rises 25% to 24,739 and hits 70 new record highs (and counting) you know it’s a good year to be buying shares.
But even the Dow’s impressive showing was comfortable shaded by Nasdaq where tech dominated and huge gains for such behemoths as Amazon, Apple, Alphabet, Microsoft, Amazon, Facebook and others pushed the index up 30%.
President Trump’s tax reforms getting the nod in December added icing to what was an already substantial cake, with an appetite not dampened even by a couple of interest rate rises.
Asia also strong
But it was not just a US rally in 2017.
Hong Kong’s Hang Seng outshone Nasdaq with a 32% gain, while elsewhere in Asia, Tokyo rose 20%, Singapore 18% and Australia with its mineral riches sat at a new ten–year high.
These are huge gains for what are substantial stock markets, but those prepared to take greater risks were rewarded even more as emerging markets reawakened after a few years in the doldrums.
Latin America proved especially fruitful. Argentina’s return to the international fold under its new business friendly government under Mauricio Mauri sent its stock market rocketing along with neighbour Chile.
Both of those countries are designated frontier markets as they are not sufficiently developed to be included in the emerging markets category, but many pundits are tipping both South American countries as two to watch in 2018.
London not so good
What of the laggards. Sad to say London’s FTSE 100 was one of the worst performers with a modest 5.7% rise at 7,537
Brexit uncertainty undoubtedly played a part and the UK also undershot its European neighbours in Frankfurt and Paris, which posted gains respectively of almost 16% and 11.3%.
China, too, was lagging well behind other countries in Asia even with a strong rally since May when the Shanghai Composite was one of the few indices in the red.
The index rallied subsequently and is up by more than 6% currently over the start of the year, which would be fine in most years but looks a little sub-standard for 2017 compared with its rivals in Asia.
And for those who expected Pakistan to continue the fantastic performance seen in 2016, commiserations.
As one local newspaper reported: “From Asia’s best stock market to Asia’s worst.” The index has shed 20% over 2017 ahead of elections next year.
More to come
So more importantly what for 2018. With most stock markets at or close to all-time highs logic might suggest down is the likely direction.
Not necessarily. Adrian Lowcock at fund manager Architas believes China will reassert itself as the leader of Asia as underlying economic data is supportive of strong single digit growth and valuations remain attractive.
“Emerging markets closest to China will benefit from a halo effect so prefer Asian Emerging Markets.”
India is also worth a mention as structural reform there should begin to work through.
Among established markets, business and consumer confidence has been improving across Europe and also is much earlier in the economic cycle than the UK and the US.
“The recovery and expansion phases of the economic cycle tend to be the phases where there is the largest movement in terms of economic growth,” says Lowcock.
Japan is on a recovery trend and corporate earnings have also been rising offsetting the rise in company ratings. Real wages are also rising for the first time since 2010.
And in the crucial US markets global recovery, flat US wage and low volatility have helped as well as tax reforms and pundits see these trends continuing.
Wild cards include North Korea or the phenomenal run of tech and online companies coming to an abrupt halt, but those arguments were heard at the beginning of 2017 and look how that turned out.
-- Statistics as at 19/12/17 --