Top Ten Countries in the MSCI EAFE Index (as of 6/30/15)
Chart of the Week for July 24, 2015 - July 30, 2015
The Morgan Stanley Capital International ("MSCI") Europe, Australasia, and Far East Index ("EAFE") is a benchmark commonly used to measure non-U.S. developed country stock market performance and the MSCI Emerging Markets ("EM") Index is a benchmark commonly used to measure emerging country stock market performance. Each index consists of approximately twenty countries and a country cannot be a member of both benchmarks. The bar chart above shows the net performance in U.S. dollars for the one-year periods ended June 30, 2015 ("current" period) and June 30, 2014 ("prior" period) for the MSCI EM Index, the MSCI EAFE Index, and the top 10 non-U.S. developed countries. The top 10 countries were determined by their market capitalization in the MSCI EAFE Index as of June 30, 2015. The country with the largest market capitalization (Japan) is listed first, and the country with the smallest market capitalization of the ten countries reported (Sweden) is listed last.
Developed countries stocks lost 4.22% in the current period (dark blue bars above), in contrast with a positive 23.57% return in the prior period (light blue bars above). In the current period, Hong Kong (+12.39%), Japan (+8.31%), and Netherlands (+2.52%) were the only countries shown that posted positive returns. Hong Kong stocks may have benefitted from a rule change that now permits Chinese mutual funds to invest in the Hong Kong stock market. Japanese stocks may have benefitted from their central bank initiatives and their ongoing structural reforms. Eurozone stocks may have been hurt by concerns over the Greek debt situation and were influenced by the strength of the U.S. dollar.
Emerging market stocks lost 5.12% in the current period, compared with a positive return 14.31% in the prior period. Factors contributing to the negative return in the current period included concern over the Greek debt situation and volatility in the Chinese stock market.
No one can be certain in which direction individual countries or entire markets will move in the future, as past trends are no guarantee of future results. It is important to understand the principles of domestic and international markets and diversification before investing.
Posted by: sarah_oz@yahoo.com
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