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By Marc Jones and Saqib Iqbal Ahmed
LONDON / NEW YORK (Reuters) – For the global financial markets, the second year of the COVID pandemic has been as dramatic as the first.
Securities bulls have held firm, rising energy and food prices have turbocharged inflation, shaking bond markets, and China has wiped out $ 1 trillion in its heavy technology and property sectors.
On top of all that, Turkey will emerge from currency chaos in 2021, with bitcoin and other cryptocurrencies crushed, small traders ruined hedge funds, and although green has prevailed, oil and dirty gas have been big winners, roughly. 50% and 48%, respectively.
1 / UNTIL STOCKS
The MSCI’s 50-country global index added more than $ 10 trillion, or 20%, to COVID’s recovery signals and central bank stimulus. It gained 27% and the Nasdaq technology gained 22%.
European banks have had the best year in more than a decade with a 34% gain, but rising market shares have lost a whopping 5% as Hong Kong-listed Chinese technology has seen a 30% drop in movements to limit Beijing’s impact.
“We think U.S. stocks are absolutely wonderful,” said Tommy Garvey, a member of the GMO asset manager’s asset allocation team, who added that valuations in other parts of the world were also expensive.
2 / TAKES OILS
Commodity markets have been blinded by the fact that the world’s largest resource-hungry economies have tried to return to normal. They are 50% and 48% oil profits and are the best they have been in five years and have left prices well above pre-pandemic levels.
The industrial key metal hit a record high in April and rose by almost 25% for the second year in a row. Zinc has had a similar gain, while aluminum has gained about 40% in its best year since 2009.
Precious metal gold has fallen, but corn has grown by almost 25% in sugar markets, sugar by 22% and coffee by 70%.
3 / WORDS IN THE CHINESE STORE
China’s crackdown on its big online businesses, along with the crisis in the property sector, has taken more than $ 1 trillion off its markets this year.
Alibaba (NYSE :), the equivalent of the Chinese Amazon (NASDAQ :), is down almost 50%. The US-listed Chinese golden dragon stock index has fallen 42%, and Evergrande has just become the highest default ever.
This has plagued the high-yield or “junk” bond market, which has lost approximately 30%. Real estate bonds account for 67% of China’s top ICE (NYSE 🙂 high performance index.
“If home sales continue to fall at the current rate, you can get a 1% discount on (Chinese) GDP,” said Sailesh Lad, head of Fixed Income at Emerging Markets Active Emerging Markets at AXA Investment Managers.
4 / BONDS – NO TIME TO BUY
The rise in inflation and the start of the closure of large central bank faucets have made it a difficult year for bond markets.
The US Treasury – a global benchmark for government-indebted investors – will report a loss of around 3%, the first red result since 2013, and German Bunds fell by around 9% from 22 December.
On the plus side, the most risky group of “junk” corporate bonds (CCC-rated and underperforming) has gained about 10% in the U.S. and Europe.
Inflation-related bonds also performed well, not surprisingly, with US TIPs returning 6%, euro-denominated equivalents gaining 6.3% and UK bond yields gaining 3.7%.
5 / MEME EROMENA
Retailers took to Wall Street very much this year, encouraging impressive moves and a high volume of trading in ‘meme’ stocks.
Shares of GameStop (NYSE 🙂 rose nearly 2,500% in January, but will rise 700% year-on-year. AMC Entertainment (NYSE :), another favorite meme, is still up about 1,200% a year, up from 3,600% in early June.
Tesla (NASDAQ :), a free electric car maker, recovered earlier this year. However, other innovation-related funds or shares, such as the ARK Innovation Fund and Solar Energy Shares, BioTech Shares and a Special Purchasing Company or SPAC, have fallen by between 20% and 30%.
6 / TAKE A TURKISH LIRA BATH
The decline of the Turkish lira is not uncommon today, but this year’s explosion has been spectacular by its standards as well.
Things started to get ugly in March when self-proclaimed enemies of interest rates, President Tayyip Erdogan, replaced another central bank governor. But it has worsened since its new head of bank began lowering rates in September.
Despite a modest rebound after the government drafted an unorthodox plan to limit the pain, the pound is still below 40% a year and government bonds have fallen.
7 / INFLATED PALPITATIONS
The rise in inflation became a major concern for investors in 2021, as the pandemic disrupted the global supply chain and made it difficult to meet demand from microchips to chips.
As US inflation rises to its highest level since the 1980s, the Federal Reserve announced this month that it would end its pandemic-era bond purchases sooner than expected, and the Bank of England became the first G7 central bank to raise interest rates since COVID erupted.
Other major central banks are expected to continue next year, but some of the major emerging markets are well advanced in the process.
8 / MURPEGIA MARKETS
Investors had high hopes for the rising markets for the year, but many have been disappointed.
China’s struggles and the persistence of COVID have lost 5% of EM shares, which seems even worse compared to a 20% rise in the world index and a 27% jump in Wall Street.
Local government EM government bonds also performed poorly, losing 9.7%. Dollar-denominated bonds have performed slightly better, especially in oil-producing countries, but JP Morgan’s EM currency index, which excludes them, has fallen by almost 10%.
“China was the big story of the year,” said Jeff Grills, head of emerging market debt at Aegon (NYSE 🙂 Asset Management, adding that interest rates are likely to rise rapidly and far next year and how growth will continue. yours.
9 / CRYPTO TAKES CARE OF HIM
at nearly $ 70,000; “memecoins” worth millions of dollars; A successful Wall Street list and a huge crackdown on China: 2021 was still the wildest time for cryptocurrencies, even by the industry’s free-wheel standards.
Bitcoin’s jump of about 60% may be weak compared to last year’s 300% rise, but despite the Chinese crackdown in May, the price fell by almost half.
, A digital token launched as a joke bitcoin spin-off in 2013, rose more than 12,000% since the beginning of the year in May, falling by about 80% by mid-December.
Non-consumable tokens (NFT) – code strings stored in a blockchain that represent a unique property of digital art, video, or even tweets have also exploded. A digital collage by American artist Beeple sold for nearly $ 70 million at Christie’s in May, making it one of the three most expensive pieces by a living artist sold at auction.
10 / GREEN DREAMS
The dream of going green has come to a halt this year. The issuance of green bonds is set for another record year, nearly half a trillion dollars. The “ESG” version of MSCI’s flagship global stock index has risen more than 2 percentage points from the standard version, and China’s stock index has risen more than 45 percent, while other sectors have fallen.
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