Top Ten Countries in the MSCI EAFE Index (as of 12/31/16)
Chart of the Week for January 20, 2017 - January 26, 2017
The Morgan Stanley Capital International ("MSCI") Europe, Australasia, and Far East Index ("EAFE") is a commonly used benchmark to measure non-U.S. developed country stock market performance and the MSCI Emerging Markets ("EM") Index is a commonly used benchmark to measure emerging market stock market performance. Each index consists of about twenty countries and a country can be a member of the MSCI EAFE or EM Index, but not both. The bar chart above shows the net performance in U.S. dollars for the one year periods ended December 31, 2016 and December 31, 2015 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 December 31, 2016. 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.
From the perspective of a U.S. dollar-based investor, the EAFE Index returned 1.00% in 2016 (current period - dark blue bars above), which was an improvement on the negative -0.81% return in 2015 (prior period - light blue bars above). Developed European markets returns were mixed in the current period, as the Brexit vote in the UK, central bank easing across Europe, and a stronger U.S. dollar impacted returns. The Japanese market was positive in both periods, with the current period having lower returns as economic data was mixed and the Japanese Yen fell against the U.S. dollar. Emerging markets posted a positive return of 11.19% as rebounding commodity prices and central bank policies helped recover from last year's -14.92% return.
No one can be certain 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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