Stock market performance 2011: which country did the best?

The stock market performance of major stock indices in 2011 may shock you. One of the best-performing markets is the US. That’s right – the lumbering, deficit ridden, and low-growth giant.

The US stock market returned 5.2 percent year to date.

Below is a table that shows how it compared to other major markets.

Country YDT % Return

Germany 5.9

US 5.2

France 3.0

Indo. 2.8

Korea 2.4

China 0.6

Australia -1.3

UK -1.5

Japan -7.2

Mexico -9.07

India -9.9

Brazil -10.0

This list must be shocking to many. Brazil and India are touted as the blistering hot emerging market economies with sound public finances and prudent monetary policy. Yet, their stock markets have tanked this year.

This illustrates two points.

One, it’s all about what price you pay. India and Brazil, for example, are obviously better growth stories than the US. However, in the last two years, their stock prices have simply gotten ahead of the fundamentals and 2011 was a time of reckoning.

Two, domestic monetary policy matters. Monetary policy is the second biggest driver of financial asset prices and even in the globalized era, home bias is still prevalent.

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