Which asset classes gave the best returns this year?
Cast your eyes on the chart alongside. At first glance, it looks as if the Caracas Stock Exchange Stock Market Index, representing Venezuela’s stock market, wins the top slot for 2017 so far among various asset classes. It went up a whopping 3972% year to date.
But take that massive spike with a large dose of salt, as it is merely a reflection of the economic turmoil the country is in (soaring inflation, poverty and severe food shortages).
The Venezuelan government has stopped publishing inflation figures, but estimates range from 2000% to 4000%. A chief reason for such a meteoric rise in Venezuela’s stock markets, which are denominated in the local currency, is the bolivar’s free fall as hyperinflation intensifies. The rate in the black market—where most Venezuelans acquire dollars—weakened to 115,734 bolivars per US dollar on Tuesday, according to dolartoday.com, a website that tracks the data.
Investors would rather do without the kind of returns seen in Venezuela. We’ve included its stock index here merely as an eye-popping illustration that underlines the fact that nominal returns from different countries need to be viewed in conjunction with other indicators.
Compared to Venezuelan stocks, bitcoin looks positively sober. Its phenomenal gain of 1767% this year makes it the real numero uno in our study. The Indian Nifty Midcap 50 Index occupies the next spot, as valuations of mid-cap companies raced ahead of their larger peers. While some commodities—palladium, zinc—have performed well, returns from energy, gold, agri-commodities weren’t impressive. Little wonder, the CRB Commodity Index ended up as the second-worst performer. Bond prices were the worst performer in 2017.
For the purpose of this analysis, barring the indices (i.e. Nifty 50, Nifty Midcap 50, MSCI India, MSCI Emerging Markets, MSCI World, Dow Industrials and Caracas stock market), the returns for other asset classes have been taken in rupee terms.
Note that despite the great run the Indian markets have had this year, MSCI India has underperformed the MSCI Emerging Markets index.
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