The Global Market First-Half Scorecard

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

We are now just past the halfway mark of 2015.

And as the French say: “plus ça change, plus c’est la même chose.”

Loosely translated, this means “the more things change, the more things stay the same.”

And looking at the performance of global stock markets in the first six months of the year, the French saying has never been more approprié.

At the start of the year, I wrote about the performance of the 46 global markets that I monitor daily at my firm, Global Guru CapitalNOTE: Global Guru Capital is a Securities and Exchange Commission-registered investment adviser and is not affiliated with Eagle Financial Publications.

In that edition of The Global Guru, I reported that only nine of those 46 markets generated double-digit percentage gains in 2014. That also was by far the lowest number of big gainers since 2011.

The scorecard for 2015 looks a little different.

So far this year, 10 global markets have recorded double-digit percentage gains. Another four have managed to log gains of about 9%.

That’s better than 2014 as a whole. But the number of big gainers remains elusive.

And the top performers of 2015 are a very different group compared to the top performers of 2014.

Most notably, the U.S. stock market (#8 in 2014) has essentially flatlined in 2015, while formerly battered markets such as Russia (#46 in 2014) have soared.

A Cold War Script Flip

Last year, the U.S. equity market, as measured by the Vanguard Total Stock Market ETF (VTI), finished eighth in the global market standings with a 12.54% total return.

Through the first half of 2015, VTI is up just 3.59% as of yesterday’s close.

That’s not exactly a rip-roaring performance. It also puts VTI in the middle of the performance pack in 22nd place.

By contrast, Russia, the stock market that everyone loves to hate, has seen its stock market vault to the top of the first-half scorecard.

The Market Vectors Russia ETF (RSX) has logged a most impressive total return of 21.46%. That’s a major rewriting of the 2014 script for RSX, which was a cellar dweller last year with a negative total return of 47.22%.

The 2014 torching of the market in Russia was something that I thought was way overcooked.

I was even mocked for my views on Russia on an appearance on Fox Business almost exactly a year ago.

In November, I received my #1 contrarian indicator signaling a potential turn in the Russian market — a cover story on Russia’s wounded economy in The Economist.

Sure enough, Russian stocks turned upward, pretty much as I expected.

The Best of the First Half

So, which markets joined Russia to make up the rest of the top 10 performers year to date in 2015?

In a close second place is the iShares MSCI Denmark (EDEN) with a gain of 20.71% so far this year, followed in third place by the iShares MSCI Ireland (EIRL), which came in with a stellar 17.07% gain.

Name Ticker YTD Total Return 2015
Market Vectors Russia ETF RSX 21.46
iShares MSCI Denmark Capped EDEN 20.71
iShares MSCI Ireland Capped EIRL 17.07
Deutsche X-trackers Harvest CSI300 CHN A ASHR 16.23
iShares MSCI Italy Capped EWI 14.48
Global X FTSE Portugal 20 ETF PGAL 13.28
iShares MSCI Japan EWJ 13.20
iShares MSCI Israel Capped EIS 13.05
 iShares MSCI Belgium Capped EWK 12.11
iShares MSCI Netherlands EWN 11.19

It is worth noting that six out of the 10 top performers are European stock markets. Also on the list of top performers were stocks from Italy, Portugal, Belgium and the Netherlands.

Europe’s rebound is also something that I made a case for in early February in The Global Guru.

And, yet again, I was mocked for my views on another appearance on Fox Business.

If this keeps up, I’m going to replace Economist magazine covers as my #1 contrary indicator with appearances on Fox Business when my market forecasts are questioned.

Notable here in this list is the presence of the Deutsche X-trackers Harvest CSI300 CHN A-Shares (ASHR), an exchange-traded fund (ETF) that invests in the domestic Chinese stocks.

This ETF still managed to make a strong year-to-date showing despite having trimmed some 20% of its value in the past month leading up to July 10.

The hot air may now be out of the Chinese bubble. But there was a lot of money made during the helium-filled expansion.

The Worst of the First Half

When it comes to the worst performers of the first half, there are some familiar markets that just can’t seem to get their act together.

Take, for instance, the all-too-familiar Greek markets. The Global X FTSE Greece 20 ETF (GREK) was nearly the worst performer last year, down 39.96% in 2014.

So far in 2015, GREK has continued to crater, down another 15.97%.

That poor year-to-date performance might just be about to turn.

Yesterday’s bailout agreement between Greece and its creditors is the first really bullish news on the Greek stock market that we’ve had in a very long time.

Name Ticker YTD Total Return 2015
Market Vectors® Egypt ETF EGPT -22.64
Global X MSCI Colombia ETF GXG -20.84
Global X FTSE Greece 20 ET GREK -15.97
Global X MSCI Nigeria ETF NGE -15.42
iShares MSCI Turkey TUR -13.45
Market Vectors® Indonesia ETF IDX -12.56
iShares MSCI New Zealand Capped ENZL -11.53
iShares MSCI Brazil Capped EWZ -10.69
iShares MSCI All Peru Capped EPU -9.62
iShares MSCI Canada EWC -9.08

So what’s the worst performer of 2015?

That honor belongs to the Market Vectors Egypt ETF (EGPT), which suffered a first-half drubbing of 22.64%.

Nor has the Middle East been kind to nearby Turkey in the iShares MSCI Turkey (TUR), which took a decided turn lower this year. It’s down 13.45% so far in 2015 after finishing 2014 in third place with a big gain of 15.76% for the year. Former global stock market favorite Indonesia also has taken a drubbing.

The lesson?

The tide of global stock performance is constantly shifting.

So, yes, the French are correct when they say, “the more that things change — the more they stay the same.”

Or as the Greek philosopher Heraclitus observed, “The only thing that is constant is change.”

In case you missed it, I encourage you to read the e-letter column from last week about investing in the jewel of Southeast Asia. I also invite you to comment in the space provided below my commentary.

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