Chart of the Day: Markets in context

Today’s chart is part of a great series of continually updated charts by DShort at his blog here.

This puts the current rally in equity markets around the world in context:

the chart illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows

Note the table on the right showing the nominal percentage return since the low in March 2009 – for comparison purposes the S&P/ASX200 Index is up 35%.


  1. Note the table on the right showing the nominal percentage return since the low in March 2009 – for comparison purposes the S&P/ASX200 Index is up 35%

    Which is by far the worst result of all the major indices. The gains were all made on the FX market not the equity market.

    This is (yet another) example of how the mining boom rewards no-one except the miners and government. Even shareholders in Australian mining companies haven’t done particularly well!

    The currency effect of the boom depresses non-mining sectors and encourages Australians to spend as much money as possible overseas, further depressing the domestic economy.

    Fanboy has suggested that we can all share in the mining boom by investing in mining companies, but this plainly isn’t the case for Mining Boom 2.0. BHP is trading where it was more than four years ago.

    Mining Boom 1.0 delivered great returns for investors in mining companies. Mining Boom 2.0 has delivered very litte, and a whole lot of pain for everyone else.

    • Remember my piece on the ASX50 = ASX8 Lorax?

      So yes its surprising given:

      a. there was a massive reinflation of house prices from March 2009 to say November 2010 (18% or so?)
      2. there was a massive reinflation of commodity prices (incl. gold)

      So the big four banks (effectively residential property investment companies) and the big four miners (The ASX8) which together comprise almost 99% of profit growth in the last 12 months, should have seen massive increases in share prices…

      There are of course pearlers within the index (particularly Small Ords) who have done well, despite the mining boom.

      • The ASX8 … should have seen massive increases in share prices…

        But they didn’t. It all went into the currency, which in theory makes Australians “richer”, but also depresses the domestic economy, and creates a huge incentive to spend money overseas.

        Sure, the government has been a big winner through increased tax receipts, but miners will be able to offset the current capex splurge, which will reduce tax takings in the short to medium term.

        Please Fanboy, tell me how I, as an ordinary Australian not working in the mining sector, can benefit from the mining boom? You’ve suggested buying mining company shares in the past, but that would have delivered very little. So how?

        • From memory my ‘buy shares’ comment was in response to whining from some that these are international companies and that all profits go to foreign shareholders – buy shares if you want dividends!

          HnH has explained several times that the resources boom has kept Australia from a fate such as that experienced by Ireland – I suggest you re-acquaint yourself with some of his previous posts.

          Not going down this path again (you know my views) apart from noting that in other booms (property, tech, agricultural, whatever) I have not directly benefited as I do not participate in these sectors. The fact that some have benefited does not concern me – I don’t get your gripe. It is the nature of booms – some disparity (perhaps you would prefer ‘inequality’) is to be expected. Don’t stress over it.

          • My gripe is that this boom has disadvantaged other sectors.

            I don’t mind if others do well — good luck to them. I do mind when a boom in one sector kills off other sectors.

            I you haven’t grasped that by now I doubt you ever will.

          • The boom has not disadvantaged other sectors. Let alone killed them off!

            Granted the effect of the high AUD has had a deleterious effect on some sectors. I seem to recall that recently HnH saying something to the effect that this could have been better managed – a management issue for those in power, not the resources sector.

          • The boom has not disadvantaged other sectors

            Manufacturers, tourism operators, retailers and other non-mining exporters would beg to differ.

            If you are suggesting the mining boom (and mining investment) are not the main driver of our high interest rates and strong currency, then I don’t know where to begin.

          • I am suggesting that the management of interest rates and currency levels are not the province of the resources sector.

          • Oh I don’t know. Tax policy is! Why not stack the RBA with mining execs?

            The government tried to introduce tax changes that would have slowed the mining boom and redistributed some of the benefits. What happened? The mining lobby did its darndest to bring down the government!

          • ‘The mining lobby did its darndest to bring down the government!’

            No. Simply acted to protect sector interests by campaigning against a poorly drafted, ill-conceived, inequitable tax.

            MRRT is progressing, no doubt you are pleased.

        • If you suffer from a nonperforming portfolio of top 8 stocks it seems that buy,hold and pray has taken another victim.
          Trade this volatility opportunistically and perhaps periodically write covered calls?
          Thats my best shot.

          • If investment in equities has been reduced to “trading the volatility” then it truly has become a casino.

            (not that I disagree)

  2. Prince,

    You’ve been saying for a while now that the ASX could rally up to 4300. If we go through it this week (on more Euro “optimism”) where’s the next upside target?