Year in review: NZX50 does well but Wall Street does better

The New Zealand sharemarket had one of its better years but in world terms was a laggard in 2013.

The benchmark NZX50 Gross was up 16.5% to 4737.01 at year’s end, a rise of 16.5%. This compared with one of the world’s best performances of 24.2% in 2012.

This year, the NZX50 consistently climbed all year from 4066.5 to peak at 4951.36 in mid-November.

But it took a body blow as investors factored in negatives such as the impact of a potential change of government in election year, most significantly the nationalisation of power price setting.

Labour and Greens released their joint electricity policy just as the first of the three state-owned generators, Mighty River Power, was floated to the public.

Shares in both MRP and Meridian Energy finished the year below their issue prices, while the third, Genesis Energy, is due to list early this year.

Internationally, the NZX50’s 16.5% return was below average: the Global Dow rose 24.5%. But it was better than Australia, where the S&P/ASX200 rose 15.15%.

While some of the best-performing markets were in Europe, the global standout was Tokyo’s Nikkei stock average, which rose 56.7% due to aggressive monetary easing by the Bank of Japan.

Other Asian markets were mixed, with Pakistan (up 49.4%) being the only market to trail Japan and head off New Zealand, which was the third best performer the region.

The biggest loser was China, where the Shanghai Composite fell 6.7%. Hong Kong’s Hang Seng rose 2.9% and Singapore was unchanged.

Wall Street had its best performance since 1995, with the blue chip Dow Jones Industrial Average rising 27%, better than any index in Europe.

Underlying Wall Street's stellar performance was easy money from the US Federal Reserve’s stimulus money and the improving US economy.

The broader S&P 500 index climbed 29.6% in gross terms and far outpaced the rally predicted by even the most bullish Wall Street experts.

Many hedge funds were left in the dust, the Wall Street Journal reports, alongside investors who use "tactical" timing of the markets' ups and downs and those who spread their bets among a wide variety of assets such as commodities, emerging markets and exchanged-traded funds.

The gains went to those investors who stayed glued to old-fashioned – and often low-fee – US stock funds. The average mutual fund focusing on large-company stocks was up 32% this year, while small-company stock funds returned 38% on average.

European stocks rose, with the Stoxx Europe 600 gaining 17.4%. Germany had another front-running year, adding 25.5% to last year’s 25.1% world-beating performance.

It was headed this year only by Finland (up 26.5%) with Denmark (25.1%), Sweden (23.2%), Norway (22.9%) and Spain (21.4%) next.

The UK’s benchmarket FTSE100 rose 14.4% but was outstripped by the broader FTSE250 with 28.5%, the best-performing stock index in Europe.

Many emerging markets declined as global economic growth eased off. As noted, China fell 6.7% but so did Brazil (down 15.5%) and Chile (-15.%).

Canada’s S&P/TSX composite had another unspectacular with a 9.5% but it was better than 2012’s 4%.