How did the international stock markets perform during the Covid-19 recession?

Podcast: How did the international stock markets perform during the Covid-19 recession?

The effect of the Covid-19 on the stock markets around the world was widespread. Most major equity markets around the world witnessed a steep decline in the stock prices. However, the degree of the stock market correction and recovery was different from one country to another. How did various stock markets around the world weather the Covid-19 pandemic? 

The Covid-19 originated in Wuhan, China. By being the ground zero, you may expect the Chinese stock market to suffer the most from the Covid-19 pandemic. Surprisingly, the Chinese stock market declined the least among major world stock markets. iShares MSCI China ETF (MCHI) was down only -19.17% during Feb 19-March 23rd, 2020. Also, the Chinese stock market is the best performing market year-to-date. The Chinese stock market was up 12.13% year-to-date based on iShares MSCI China ETF (MCHI) (see Chart 1). All year-to-date numbers in this paper are calculated for the time period from January 1, 2020 through September 25th, 2020. The stock market correction period is assumed to be between Feb 19th through March 23rd, 2020. The stock market recovery period is from March 23, 2020 through September 25th, 2020. 

Chart1. The stock market performance based in iShares ETFs, data provided by Yahoo! Finance

The US stock market was the second-best performing stock market year-to-date. After the initial sharp sell-off by 33.9% the US stock market saw a V-shaped recovery. The US stock market was up almost 50% after the bear market selloff. For the year-to-date, the US stock market was up 3.59% based on the iShares Core S&P 500 ETF (IVV) (see Chart 1).  

The Japanese stock market was the third best performing stock market year-to-date.  The Japanese stock market was initially down -22.34% based on iShares MSCI Japan ETF (EWJ). However, it has also experienced a steep recovery and covered all its loses year-to-date.

On another hand, the three worse performing stock markets year-to-date were the United Kingdom, Russia, and France. The UK Stock market failed to recover its massive, more than 40%, initial losses during the Covid-19 pandemic. The UK stock market is still down -25% year-to-date based on the iShares MSCI United Kingdom ETF (EWU). The Russian stock market experienced the decline of 39.41% during the Covid-19 selloff and failed to recover. The Russian stock market is still down -23.63% year-to-date based on iShares MSCI Russia ETF (ERUS). The French stock market was down -36.84% during the Covid-19 selloff and remains -15.37% year-to-date based on iShares MSCI France ETF (EWQ).

The effect of the Covid-19 on the stock markets around the world was widespread and sharply negative. However, some stock markets saw a V-shaped recovery whereas others failed to recover and remain far in the red still. The three best performing markets year-to-date were the Chinese, the US and the Japanese stock markets. These three stock markets managed to recover all initial losses and enter a positive territory year-to-date. On another hand, some countries were not as lucky. The UK, Russian and French stock markets were still down more than double digits year-to-date. 

Data:

Yahoo! Finance. Data was retrieved from http://finance.yahoo.com

Disclosures: 

The assumptions of the countries’ stock market performance were based on selected iShares Exchange Traded Funds performance. These ETFs were used as a proxy to represent each country’s stock market performance. There are many other different sectors and indexes available that you may consider. The results may vary based on what index you select.  

The analysis is based on historical data and future expectations that may not be correct. This paper was written as an opinion only. The data is not guaranteed to be accurate or complete. Please consult with your financial advisor before making an investment decision. Neither ECNFIN.COM nor its author are responsible for any damages or losses arising from any use of this information.

ECNFIN.com and its podcast are not associated with nor do they necessarily represent the opinion or advice of Epiqwest Culver Wealth Advisors LLC.  Past performance doesn’t guarantee future results.



Categories: China, ETFs, Europe, Markets, Podcast, World

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