The combination of the oil price collapse and the continuing conflict in Ukraine proved particularly toxic for investors in Russian equities.
Russia was by some way the worst-performing country in 2014 among MSCI indices, showing a total return of minus 42.3 per cent, calculated on a dollar basis, which includes dividends and share price movements.
By contrast Egypt was the best-performing stock market tracked by MSCI, showing total returns of 31.1 per cent.
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Reform is not a defining feature of Egypt, where 18 months ago an army coup toppled the democratically elected government of the Muslim Brotherhood and subsequently led to the election as president of Abdel Fattah al-Sisi, a former army chief. But a relief rally after the turmoil of the Arab spring has led to the MSCI index for Egypt almost doubling since the middle of 2013.
Hopes for reform boosted Indonesian stocks, which have been among the best performers during the past five years and are again near the top of the table, with a total return of 26.6 per cent.
International fund managers are moving into southeast Asia’s biggest economy, attracted by the potential returns from managing Indonesians’ money. Investors have taken heart from early steps by the new president, Joko Widodo, to address some underlying economic problems.
Indonesia has just announced that it will ditch petrol subsidies and link retail prices to international oil markets, in one of the biggest reforms to its energy subsidies in decades.
Shares in the Philippines have grown steadily since the victory of the reform-minded administration of President Benigno “Noynoy” Aquino in 2010. Its stock market shows total returns of 26.4 per cent.
Investors are attracted by a structurally advanced economy, with a service sector that accounts for more than half the economy. A big proportion of that income comes from overseas.
India was another top performer, with returns of 22.6 per cent. Investors have been cheered by election successes of the governing Bharatiya Janata party, which they hope will encourage premier Narendra Modi to press on with his reform programme.
Military rule has not prevented investors in Thailand receiving 16.8 per cent returns in 2014. The army coup in May in southeast Asia’s second-biggest economy was followed by pledges to tackle waste and eliminate corruption, although the junta has scrapped all polls and made only a vague pledge for their return.
There are also questions over the appetite for reform of Recep Tayyip Erdogan. The former Turkish premier, who was elected president in August, is keen to stifle dissent in business circles and punish those with links to the moderate Islamist Gulen movement. But this fractious political backdrop has not stopped investors getting total returns of 17.8 per cent from Turkish shares.
Given the strength of the US economic recovery and the surge in value of the dollar, it is perhaps surprising that the US ranks only eighth in the MSCI league table, with total return of 14.5 per cent.
Exposure to the tumbling price of oil has hit Norwegian shares, returns of which were minus 20.3 per cent.
But Portugal was the worst-performing European country in the MSCI, with total returns of minus 37.2 per cent. Investors were upset by the rescue of Banco Espírito Santo, which was split into “good” and “bad” banks as part of a €4.9bn rescue that protected taxpayers and senior creditors but left shareholders and junior bondholders holding only toxic assets.
Portugal was also hurt by growing unease that deflation in the eurozone would particularly affect peripheral eurozone countries and concern that its elections in 2015 would provide an outlet for anti-austerity sentiment.
Austria is seldom thought of as peripheral in the eurozone, but it too has been a laggard with total returns of minus 29 per cent. Analysts said this reflected the exposure of its banks to Russia and eastern Europe, which have been suffering from uncertainty caused by the Ukrainian conflict.
The stand-off between Russia and Europe over Ukraine has also hurt Hungary, where shares have suffered a return of minus 26.9 per cent for 2014. Hungary was one of the countries to express dismay when Russia abandoned South Stream, its $50bn gas pipeline across the Black Sea into Europe.
Hungary has alienated investors by taxing advertising revenues and forcing banks to compensate borrowers for what it sees as unfair conditions and charges on lending. However, in October Viktor Orban, prime minister, abandoned a plan for the world’s first internet tax following the largest mass demonstrations in Budapest in recent memory.