July wasn’t that bad a month for equities, according to analysts at S&P Dow Jones. Developed world equities advanced 1.19%, while global equities only nudged higher, with a 0.32% gain. Yet again the US markets outperformed – up 1.68% against the UK’s 1.13% gain.

That said, for July, according to S&P Dow Jones 15 of the 25 markets gained, up from last month’s 6 and down from May’s 22.  Luxembourg did the best, adding 8.41% for the month, 11.43% for the three-month period, and 21.12% YTD.  Finland was next, adding 5.59% for the month, 8.81% for the three-month period, and 18.03% YTD, followed by Sweden, which was up 5.05% for the month, 6.14% for the three-month period, and 18.05% YTD.

Global market returns for July from S&P Dow Jones

S&P Global Broad Market Index(BMI) Global
US MKT BMI MEMBER FROM 11/3/2020 1-MONTH YTD
$273 Saudi Arabia 38.91% 0.29% 27.36%
$72 U.A.E. 43.34% 3.50% 26.91%
$877 Netherlands 45.23% 4.55% 23.45%
$51 Luxembourg 60.30% 8.41% 21.12%
$59 Kuwait 22.45% 3.93% 19.78%
$2,287 Canada 34.46% -0.35% 19.00%
$918 Sweden 39.77% 5.05% 18.05%
$304 Finland 33.50% 5.59% 18.03%
$10 Czech Republic 51.13% -0.32% 17.82%
$1,188 India 41.92% 1.41% 17.79%
$1,410 Taiwan 38.34% -2.16% 17.55%
$75 Austria 52.25% 1.60% 17.15%
$44,919 United States 31.96% 1.68% 16.48%
$318 Russia 45.75% -1.86% 15.71%
$174 Mexico 44.66% 1.74% 15.40%
$21 Hungary 49.59% 0.79% 14.79%
$366 Singapore 35.10% 0.85% 14.78%
$2,056 France 37.01% 1.37% 13.79%
$75 Poland 44.72% 0.45% 13.77%
$69,994 Developed 30.17% 1.19% 13.55%
$512 Denmark 30.07% 4.32% 13.47%
$187 Ireland 26.30% 3.40% 12.80%
Global 28.34% 0.32% 12.06%
$3,057 United Kingdom 32.07% 1.13% 11.76%

 

Of note, the U.K. was up 1.13% for the month, up 1.80% for the three-month period, and up 11.76% YTD.  I would also add that since the market lows of early March 2020, UK equities have now advanced 32.07% versus 31.96% for the US. Finally, the UK closes the gap, a bit.

Sticking with aggregate market data, here’s a stand out fact on UK equities from Nick Lawson at Ocean Wall: “Over the past decade, UK equities have consistently underperformed other major developed markets in terms of total shareholder returns; between 2010 and 1H 2021, S&P 500 delivered 379% return, DAX delivered 111% whilst the FTSE 100 delivered only 69% (and only 9% excluding dividends) in dollar terms. Currently, the S&P 500 trades at a 2022 P/E multiple of c. 20.5x vs FTSE100 2022 P/E of c.12.6x and FTSE250 2022 P/E of c. 16.0x.”.

If like me, you think UK equities are still undervalued, I’d argue we have more to go for the UK equities revival. If we’re lucky we might see another 10 to 20% upside in relative terms would be my guess.

One last unrelated observation.

We’ve had a big Chinese sell-off which may continue for some time. I think the sell-off was deserved but I also think that maybe it’s a tad bit overcooked.

Many Chinese tech equities are beginning to look very cheap.

Also, I wouldn’t e surprised if there are some very worried folks in the head office of the CCP and the PBoC. On that score it is worth picking up on this comment o9ut today from Bejing based US economist Michael Pettis, in his Global Source Newsletter:

“While I continue to expect China’s reported GDP growth for the year to be between 6 percent and 8 percent, I am starting to believe that it will be much closer to 8 percent than to 6 percent. This is because there are signs that Beijing will allow investment in infrastructure and the property sector to pick up speed in the second half of the year.”