The world’s economic and sharemarket rebound from the global financial crisis continued in the fourth quarter of last year and into January, albeit at a more moderate pace.
Following three dramatic quarters which saw a five year low and a 55% rally, equities spent much of the final quarter of 2009 in a tight trading range. The MSCI World Index rose 4.2% (in US$ terms) and Australia’s ASX/S&P200 Index increased 2.7% over the quarter in what was a substantial slowdown compared to the double-digit increases posted in the previous two quarters.
As the global economic recovery and associated bull run on world sharemarkets moves into 2010, investors are asking what’s next?
While the global and local sharemarkets have rebounded from their March lows, there is still a fair way for them to go before they reach the levels they were at before the global financial crisis struck – they are still some 30% below those highs.
How central banks around the globe withdraw their stimulus measures will be key to how long economies and sharemarkets take to regain their previous highs. The Reserve Bank of Australia hiked interest rates every month of the December quarter.
Taking a long-term investment approach, over the past decade, Australia posted the best performance of developed world sharemarkets with a 10 year US$ total compound annual growth rate of 12.7% a year over the noughties.