Numbers are in for August and according to David Blitzer of S&P Dow Jones, the US markets have yet again beat pretty much all the competition – see the big table below for returns from the S&P Dow Jones universe.

According to Blitzer “it was another Home Sweet Home for U.S. investors, as the U.S. continued to significantly outperform the rest of the world.  For August, global markets posted a consolidated 0.70% gain, but absent the U.S. 3.26% gain, global markets were down 2.12% for the month.  The view of the U.S. dominance is not new, as the year-to-date performance has the U.S. up 9.06% and the global markets ex the U.S. down 5.22%.  Longer-term yardsticks continue the pattern, as the two-year global return is 26.00% with the U.S. and 17.42% without it, and the three-year is up 32.61%, but absent the U.S., it is up 19.09%.”

Interestingly though sector variance increased within broad equity markets. Only 4 of the 11 broad global sectors increased in value last month, down from all 11 last month (6 gained the month before that).  The spread between the best (information technology, up 5.17%) and worst (energy, off 3.28%) sectors for the month was 8.45%, up from last month’s 4.52% and the prior month’s 4.57%.  Year-to-date, information technology did the best, up 13.68%, as telecommunication services did the worst, off 9.12%, resulting in a 22.80% spread.

Unsurprisingly emerging markets had the toughest month with Turkish shares down 28.52%, followed by Brazilian equities (down just under 125) and South Africa (down 10.20%). Amazingly Egyptian equities ended the month up 2.35% closely followed by Thailand and the Philippines (and Hungary) all of which recorded low single-digit increases.

S&P Global Broad Market Index(BMI) Global
US MKT % % BMI MEMBER FROM 11/8/16 1-MONTH
VALUE Of of BMI Global 27.89% 0.70%
$ BILLION TYPE Global Ex-U.S. 18.84% -2.12%
$55,520
$5,294 100.0% 9.54% Emerging 15.50% -3.78%
$13 0.2% 0.02% Egypt 54.25% 2.35%
$167 3.2% 0.30% Thailand 20.02% 2.24%
$78 1.5% 0.14% Philippines -3.46% 1.83%
$16 0.3% 0.03% Hungary 15.47% 1.80%
$38 0.7% 0.07% Qatar 0.97% 0.54%
$737 13.9% 1.33% India 28.94% 0.15%
$126 2.4% 0.23% Indonesia -6.84% -0.01%
$43 0.8% 0.08% U.A.E. 1.10% -0.07%
$775 14.6% 1.40% Taiwan 23.53% -0.25%
$75 1.4% 0.14% Poland 34.63% -0.26%
$164 3.1% 0.29% Malaysia 11.88% -0.52%
$10 0.2% 0.02% Czech Republic 29.31% -2.23%
$13 0.2% 0.02% Pakistan -25.81% -2.82%
$185 3.5% 0.33% Mexico -2.17% -3.01%
$1,725 32.6% 3.11% China 26.54% -4.03%
$32 0.6% 0.06% Colombia 10.72% -4.56%
$24 0.5% 0.04% Greece 23.12% -5.68%
$24 0.4% 0.04% Peru 31.13% -6.15%
$219 4.1% 0.39% Russia 15.18% -7.45%
$74 1.4% 0.13% Chile 11.40% -8.78%
$363 6.9% 0.65% South Africa -0.70% -10.20%
$357 6.7% 0.64% Brazil -11.34% -11.95%
$36 272.2% 0.67% Turkey -43.25% -28.52%
$50,226 100.0% 90.46% Developed 29.34% 1.19%
$20,393 40.6% 36.73% Developed Ex-U.S. 19.75% -1.68%
$134 0.3% 0.24% Israel 20.91% 5.95%
$29,833 59.4% 53.73% United States 36.74% 3.26%
$982 2.0% 1.77% Korea 24.86% 2.19%
$202 0.4% 0.36% Finland 30.61% 1.90%
$58 0.1% 0.11% New Zealand 15.82% 1.73%
$1,356 2.7% 2.44% Switzerland 19.74% 0.76%
$4,793 9.5% 8.63% Japan 19.97% -0.03%
$303 0.6% 0.55% Denmark 34.80% -0.30%
$124 0.2% 0.22% Ireland 22.12% -0.98%
$537 1.1% 0.97% Sweden 19.70% -1.18%
$1,696 3.4% 3.06% Canada 14.10% -1.23%
$161 0.3% 0.29% Norway 31.00% -1.25%
$1,677 3.3% 3.02% France 29.68% -1.88%
$1,181 2.4% 2.13% Australia 13.57% -2.20%
$607 1.2% 1.09% Netherlands 31.76% -2.30%
$71 0.1% 0.13% Austria 50.40% -2.65%
$603 1.2% 1.09% Hong Kong 13.79% -2.67%
$244 0.5% 0.44% Singapore 16.69% -2.74%
$1,528 3.0% 2.75% Germany 22.47% -2.92%
$34 0.1% 0.06% Portugal 25.13% -3.48%
$37 0.1% 0.07% Luxembourg 23.94% -3.52%
$2,898 5.8% 5.22% United Kingdom 15.47% -4.40%
$226 0.4% 0.41% Belgium 3.39% -4.57%
$504 1.0% 0.91% Spain 11.06% -5.03%
$436 0.9% 0.79% Italy 26.70% -8.75%

 

Overall returns from the MENA region have held up well. At the year to date level, Egyptian shares are up 7.31%, while Qatari shares have increased by 15%. Shares in the UAE showed a small decline of just over -1.5%. Overall, it seems like MEAN shares are holding up well, all things considered.

Maybe investors are warming up to the obvious demographic opportunities in the region. The managers of the MENA Admiral Fund note that the population of the MENA region has mushroomed from 105m in 1960 to 444m in 20171. That is a huge increase and when combined with the fact that 26% are between the ages of 15 and 292, “that means a lot of jobs need to be created. Half (51% to be exact) of the unemployed are young”. That’s a huge potential consumer market – think of all the phones, PCs and cars that can be sold (and financed). The charts from the fund paint this opportunity in stark terms. BUT the downside is also obvious. High levels of unemployment could fuel political resentment and more unrest. Many of the regimes in the region have questionable ruling elites and corruption is rife. Overlay the potential negative impact of climate change and it’s not hard to see how it could all go wrong. Lots of young people might, for instance, to decide to head north in extremis if societal collapse looms.