Brazil and Asia take the honors as the best performing stock markets in 2022: here are the winners and losers

An unprovoked war in Eastern Europe that threatens an energy crisis, new waves of COVID-19 in China, and the world's major central banks going crazy with price hikes. rates to contain runaway inflation were among the main themes of 2022.

What happened: It was a difficult year for investors as financial assets were sold off indiscriminately, with high quality and safe-haven assets also not been spared. Equities, as risky bets, were among the hardest hit.

See also: Best bear market stocks

The US market took the lead, posting massive losses and dragging averages elsewhere lower. After a year of macroeconomic and geopolitical shocks, investors reacted by downgrading the S&P 500 price-to-earnings (P/E) ratio by up to seven times, while some speculative growth segments fell by 70-80% from highs,” JPMorgan said in a recent report.

It all started with fears of rate hikes and the likely impact on fragile economic growth. Inflation has started to worsen since the end of 2020 as the impact of monetary and fiscal stimulus measures implemented following the first wave of COVID-19 started to be reflected in prices. Inflation in the United States accelerated to a new 40-year high of 9.1% in June and has since moderated slightly.

Source: US Bureau of Labor Statistics

Inflation was not a problem specific to the United States, as the backdrop in most other global economies was similar and pricing pressure was rearing its ugly head in all country. Global central banks had no choice but to hike rates in an accelerated fashion, which pointed to a hard landing.

After a cumulative rise of 425 basis points, the federal funds rate is currently between 4.25% and 4.50%. The Bank of Japan, which was the only central bank among developed countries not to move, recently announced maneuvers in the key rate by changing the control of bond yields, which would allow long-term rates to rise further.

The Russian-Ukrainian war that began in late February upended most well-thought-out political plans, as supply chain bottlenecks sent prices skyrocketing. inputs. This further fueled inflation even as central banks began to worry about the path of retail prices. The straw that broke the camel's back was the intermittent recurrences of COVID-19 in China.

Worst and best: The Russian stock market average and South Korea's Kospi were the worst performing indexes among G20 countries.

That Russia had a horrible year is no surprise. The MOEX Russia index lost around 43% at the end of the year. The domestic stock market was closed for about a month after prices fell in response to Russia's invasion of Ukraine. Official data released by Russia in November showed the economy plunged into recession, losing 4% year-on-year in the third quarter.

The Kopi fell around 24.89% before closing the year at 2,236.40. It was the index's first annual loss in four years, Reuters reported. Tightening of liquidity by global central banks was the main reason for the stock market weakness seen in 2022, Mirae Asset Securities analyst Kim Seok-hwan said according to the report.

One ​​of the best performers was Ibovespa in Brazil, which gained 4.7% in local currency. Analysts expect the index to continue its outperformance over the coming year. Brazilian equities should benefit from higher commodity prices for longer, very attractive valuations that do not reflect macroeconomic conditions and relatively low vulnerability...