The top-performing country this week is Greece as the FTSE/Athex 20 Capped index gains 3.77 percent over the five trading days. Investors apparently are feeling more optimistic about Greece’s future, as their prime minister negotiates this week with the troika (no, not the Russian folk dance) made up of creditors from the European Union, the European Central Bank and the International Monetary Fund, to meet their budget goal and raise the necessary income to repay its debts.
The falling price of oil is wreaking havoc on the stock markets of those foreign countries who rely heavily on the production of oil as a major part of their GDP. In other words, some countries of the world lack industrial diversity, and are so concentrated today in the energy sector, that their stock market performance looks close to a mirror image of the recent price trends in oil (down).
What would it be like if the major U.S. market indexes we hear about each night on the news, such as the Standard & Poor’s 500, were mostly energy companies and spiraling downward day after day with the price of oil? That might give a whole new meaning to the term stimulus program, when it came to motivating OPEC leaders to keep the price of oil up, which is the opposite of what they are doing now.
The stock markets of some countries are declining at such a clip lately, I am reminded of the popular movie “The Hunger Games” where each “District” specializes in a different industry in order to serve the common good. In the movie, District 5’s industry was Power, created by “harnessing the energy of the earth,” and some countries clearly didn’t think that over-concentrating in one industry was a problem, until now.
At the bottom of the list this week is Colombia with the MSCI Colombia Capped index falling 11.19 percent over the past five trading days and down 28.39 percent over the past three months. Also at the bottom of the list are Norway and Russia with the MSCI Norway IMI 25/50 index down 9.98 percent over the past five trading days and 19.08 percent over the past three months, and the S&P Russia Capped BMI index is lower by 9.09 percent and 23.08 percent over the same periods.
This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.
This article was written by Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH).