Top Ten Countries in the MSCI EAFE Index (as of 12/31/18)
Chart of the Week for January 18, 2019 - January 24, 2019
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, 2018 and December 31, 2017 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, 2018. The country with the largest market capitalization (Japan) is listed first, and the country with the smallest market capitalization of the ten countries shown (Sweden) is listed last.
From the perspective of a U.S. dollar-based investor, all global markets shown, the EAFE index (-13.79%), and EM index (-14.58%) produced negative returns in 2018 after all posted positive returns in 2017. Global factors contributing to the returns included concerns over trade between the U.S. and China, slowing global economic conditions, rising U.S. short-term interest rates, and a stronger U.S. dollar. Specific to European markets, concerns about the UK Brexit from the European Union weighed on individual country returns. Emerging Market stocks were impacted by slowing growth in China and falling commodity prices.
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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