Egypt was 2014’s best destination for stock market investors, producing a total return including dividends and share price rises of more than 30 per cent in a year in which the US led equity rallies in developed economies.
In spite of the Egyptian army coup, which toppled the democratically elected government of the Muslim Brotherhood 18 months ago, the MSCI index for Egypt has almost doubled since mid-2013.
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Total returns based on MSCI indices were calculated in dollar terms, so the recent collapse of the rouble aggravated the woeful state of the Russian market, where investors suffered a “negative return” — or loss — of minus 42.3 per cent.
The best performing large developed market was the US, where the total return reached 14.5 per cent on signs of a broadening and accelerating economic recovery, said Nick Nelson, equity strategist at UBS. In contrast, “Europe underperformed — in part because of a renewed slowdown in the economy, even in Germany, but also because of the failure to deliver significant earnings growth for the fourth year in a row.”
The core European countries of Germany and France saw losses equivalent to 9.3 per cent and 9.1 per cent respectively after taking into account dividends and price movements.
After the army’s ousting of the country’s first elected leader, the Islamist Mohamed Morsi, its former chief has inherited a divided country
European countries’ poor equity performances also reflected the dollar’s strength against the euro and sterling. The UK market made a return of minus 5.8 per cent — better than Italy’s minus 8.5 per cent, but not as good as Spain’s minus 3.8 per cent.
Portugal was the worst performing European country, with total returns of minus 37.2 per cent. In Greece, however, despite turmoil in its government bond market over renewed fears that it could exit the eurozone, shares fared relatively well — with a zero total return.
Austrian shares suffered a negative return of 29 per cent, due mainly to the exposure of the country’s banking sector the Ukraine and other parts of eastern Europe. There was also a return of minus 26.9 per cent to investors in Hungary, which has suffered economic fallout from the Ukrainian conflict.