Global Equity Market Environment Review

Our latest review of the global equity market shows continued leadership from emerging and frontier markets. Eastern European markets such as Bulgaria, Austria and Poland delivered stellar returns in excess of 40% over the past 12 months. From a global sector perspective, Financial and Information Technology sectors in the developed markets continue to lead with the Information Technology now the best performing sector across medium to longer term periods. From a style and size perspective, global mid-cap value was the best performing segment over the past 12 months. Over the past decade, small caps beat large and growth beat value. Large cap value was the worst performing style segment of the past decade.

Global EM and Frontier Markets lead

Over a 12-month period ending at 31 July 2017, emerging markets and frontier markets continued to outperform developed markets. One–year return figures were 18.9%, 14.5%, and 10.6%, respectively. Looking beyond region level, European countries namely Bulgaria (77.6%), Austria (58%), and Poland (40.6%) ended the period as the top 3 performers. On the other hand, Egypt and Oman were the two worst performers with 1-year returns of -20% and -18.9%, respectively. Southeast Asian countries, specifically the Philippines, Vietnam and Malaysia were also struggling.


Financials and Information Tech provide leadership

In terms of global equity at the sector level, return dispersion was very high with Financials and Telecommunication Services having delivered 25.7% and -4.3%, being the best and the worst performers in the last 12 months. Information Technology came second and it was the only sector consistently leading over all measurement periods from 3 years up to 15 years. In the long run, the dispersion of 10-year annualised returns was narrowed down by Energy which was the weakest sector.

Small beats Large, Growth beats Value

Taking another perspective on size and style over a 12-month period, global mid value equity was the strongest segment delivering a return of 12.9% while global mid growth equity was the worst with a 7.4% return. Over a 10-year period, global small cap equity took the lead with an annualised return of 6.7%, leaving global large value equity the weakest segment with 3.4% per annum. This segment was also the worst over 3, 5,7 and 15-year measurement periods.