Monthly Statistical Bulletin Feature Articles

Feature Article—International equity market returns

In this Bulletin we report the Australian all ordinaries index declined 15.5 per cent over 2007-08. In this feature article we compare returns, highs and lows during the 2007-08 financial year in the Australian market with 19 international markets and a world benchmark—the Morgan Stanley Capital world Index (MSCI).¹

Financial year 2008 returns

Comparing 30 June 2007 to 30 June 2008, Australia and 12 of the 19 markets declined, as did the MSCI. The Australian market fell 15.5 per cent while the MSCI lost 17.3 per cent. The worst decline occurred in Ireland at 44.0 per cent. The best gain was in Egypt at 22.9 per cent. All returns are summarised in the table below.

Peaks and troughs

During 2007-08, 17 markets and the MSCI reached decade highs in their share markets (peaks). Nevertheless, all of the markets ended the financial year below their peak, with much of the loss caused by issues emerging in the United States sub prime mortgage crisis. During the financial year 16 markets and the MSCI reached a low (trough), from which some recovery occurred by the end of the financial year. There are 5 markets where the end of financial year index value is lowest point for 2007-08.

The movement from peak to trough had different timing and impacts in each of the markets.

International equity market activity

Although the timing of the peaks varies, nearly half of them occur between October and December 2007. The dates of the peaks and troughs are listed in the table below.

The longest period between the peak and trough (turnaround) was 496 days in Ireland. This may increase as the 30 June 2008 result was the 496^th day. The shortest turnaround occurred in Canada at 8 days. The MSCI turnaround was 248 days, while Australia was 138 days. These timings do not include significant volatility within the financial year, only the peak to trough timing.

The decline between the peak and the trough in Australia was 24.7 per cent; the MSCI fell 21.4 per cent. China suffered the worst decline at 55.1 per cent, while Canada declined the least at 5.2 per cent. These losses may not have been realised. The movement from the peak to the end of financial year, and the trough to the end of the financial year is also summarised in the table for reference.

Monthly Statistical Bulletin Table 5.5

Table 5.5 shows recent monthly values of two Australian equity indices—the all ordinaries and the S&P/ASX200. It also includes commentary on recent market activity and information on the way the indices are formed.

Adrian Makeham-Kirchner

1. The MSCI index is an index based on 23 stock market indices and is regarded as a generic world market benchmark.

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