I am not sticking with my decision to spend one or two early morning hours thinking about investments. Discipline is not my forte. What happened in world stock markets in 2010?
Canada +33.33%
Mexico +19.02%
U.S. +12.97%
Brazil +1.11%
Russia +22.13%
Germany +16.06%
U.K. +10.53%
France -2.00%
Ireland -3.08%
Portugal -9.27%
Spain -16.81%
Greece -35.48%
Thailand +40.60%
South Korea +21.88%
India +16.74%
Singapore +10.87%
Taiwan +8.79%
Hong Kong +5.15%
Australia +0.08%
Japan -3.01%
China -15.79%
I intuit that mineral exporters like Canada did well, industrial exporters like China did badly. High tech exporters like Singapur did excellently. Thailand is curious: What is that country? Pic.: Thai garlic+shrimp dish.
6 comments:
I think your intuition is a little off. Let me resort the list by percent return.
Thailand 41%
Canada 33%
Russia 22%
South Korea 22%
Mexico 19%
India 17%
Germany 16%
USA 13%
Singapore 11%
UK 11%
Taiwan 9%
Hong Kong 5%
Brazil 1%
Australia 0%
France -2%
Ireland -3%
Japan -3%
Portugal -9%
China -16%
Spain -17%
Greece -35%
13 out of the 21 countries did well with one more breaking even.
Of the countries that saw their stock markets go down, one (Japan) has been trapped in an economic downturn for the last decade. Five of the losers are secondary members of the EU, and the last one (China) is an exceptional case of national bubble popping.
Excluding Thailand and the US, the remaining countries are a mixed bag economically with some being industrial such as Germany, some being based on trading and finance (Hong Kong), some being high tech and the remainder being either mixed or raw materials exporters.
Generally any well managed country can prosper in the modern era regardless of its economic niche. However, the well-managed part is critical, as Brazil's return indicates.
Canada and Russia are natural resources exporters.
South Korea, Singapur, Hong Kong - hi tech.
The others are mixed industrial countries.
What is special about Thailand?
The Wikipedia article on the Economy of Thailand gives me the impression that Thailand is essentially the Mexico of Asia. As far as I can tell from the article, Thailand is an originally agricultural country that now exports other raw materials and hosts foreign plants. Although farming occupies a large part of the population it amounts to very little of the Thai economy. The introductory paragraph from the CIA World Factbook shows that the Thai economy contracted by about 2% and then grew at an annualized rate of 7% this year. So I would partly write off the 41% stock market rebound as partly enthusiasm on the part of depressed investors and partly a recovery.
So now we can stop talking about Thailand. On to the other countries on the list.
Excluding Thailand but including Australia here is the list sorted by category:
Resource Exporters
Canada 33%
Russia 22%
Australia 0%
Brazil 1%
High Tech 14%
South Korea 22%
Singapore 11%
Taiwan 9%
Financial Services & Trade
UK 11%
Hong Kong 5%
Mixed
Mexico 19%
India 17%
Germany 16%
USA 13%
Averaging the returns from each category here are the returns:
Resource Exporters 14%
High Tech 14%
FS&T 8%
Mixed 16.25%
I agree that high tech is the most likely means of obtaining wealth as an individual and as a country, but I don't think this list proves that by itself. Returns by category were about the same for all countries not primarily engaged in finance and trade, with some variation by country.
We tend to see patterns where there is none. There must be something else.
I would also like to point out that South Korea and Japan are also mixed industrial countries. We think of semiconductor manufacturing as high tech, but it has decisively joined the Old Economy and although newer than mechanical engineering is not all that much more profitable than many of the older sectors of the economy as demonstrated by Germany's robust performance in the last ten years.
I think what you were really trying to do was to discern a pattern that would inspire personal confidence in Israel's future economic growth and security. This begs the question of whether Israel fits my expanded definition of 'mixed indutrial' and therefore requires a concrete definition of what this term means. Generally mixed industrial facilities have a small group of bright men who manage and design while a mass workforce makes the product. This was true back when automobiles were considered high tech and it is still true in electronics. Tower Semiconductor would qualify as MI, while a company that designs microchips for fabrication would not and would actually be high tech by my definition.
You need to remember that Israeli high tech is different from Oriental high tech and has the potential to be far more profitable.
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