The first recession in 30 years has left Australia languishing at the bottom for equity returns compared to both developed and emerging market regions.
According to data from FE Analytics, which examined MSCI indices in Australian dollar terms, the MSCI Australia index had lost 11.2% over one year to 14 September, 2020, and 11.7% since the start of the year.
This placed it at the bottom of the performance table against both developed and emerging markets with the MSCI North America index performing best over both time periods.
As well as Australia, the six markets were MSCI North America, Asia Pacific ex Japan, World, emerging markets, Japan and Europe.
The North America index returned 8.9% over one year and 3% since the start of the year, which made it the one of only two regions to see a positive year to date return. The Asia Pacific ex Japan region also saw positive performance of 0.8%, having been helped by the early exit from the lockdown restrictions.
Shane Oliver, chief economist at AMP Capital, said: “The main reason for the underperformance of Australian versus global shares is the strong outperformance by US shares. They have outperformed global and Australian shares this year and over the last few years.
“The US share market has a relatively higher exposure to growth stocks whereas non-US and Australian shares have a higher exposure to cyclicals and financials.”
In the US, the stockmarket was helped by the dominance of tech companies which had performed strongly this year with the tech-heavy Nasdaq index returning 25% since the start of the year.
Oliver commented: “Not only have tech stocks been direct beneficiaries of the crises via stronger demand, but growth stocks with their long earnings stream benefit more from lower interest rates”.
While five of the seven markets had posted negative returns since the start of the year, the MSCI Europe index was the only one, alongside Australia, to report negative returns over one year with losses of 3.8%.
Over a one-year period, the second-best performing region following North America was MSCI Asia Pacific ex Japan at 6.5% then world at 4.8%, emerging markets at 4.1% and Japan at 1.5%.
Performance of seven markets over one year to 14 September 2020
When it came to performance since the start of the year, this had been a turbulent period characterised by March’s market crash as a result of the COVID-19 pandemic.
The MSCI World index lost the least at 0.49% followed by emerging markets at 2.6%, Japan at 3.1% and Europe with losses of 8.7%.
Performance of seven markets since start of the year to 14 September
