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China topped the list of best-performing country equity indices during 2017; information technology lead the sector indices; and momentum came out on top among factors, according to data from index provider MSCI.
China topped the list of best-performing country equity indices during 2017, according to MSCI.
Country indices
For the month of December, the UK (up 5.0%) was the best-performing country index while the worst was France (-0.2%).
The broad market all-world index for December 2017, as represented by the return on the MSCI All Country World Index (ACWI), was up 1.6%.
Australia (up 4.8%), Canada (up 3.9%), Korea (up 3.0%), and China (up 1.9%) all outperformed over the month.
As measured by forward price-to-earnings (P/E) ratio, the most expensive country (as of year-end) was the USA with a forward P/E of 18.8, and the cheapest was Korea with a forward P/E of 8.6.
China (P/E 13.3), Germany (P/E 13.6), the UK (P/E 14.7), Japan (P/E 14.6) and France (P/E 14.9) are also trading at forward P/E ratios materially below the market average (ACWI) P/E of 16.3.
For the full year, China returned 54.3%, followed relatively closely by Korea which achieved a return of 47.8%. France came third with a 29.9% return and Germany, fourth, with 28.5%. The ACWI returned 24.6%.
Sector indices
The best-performing sector index during December was energy (up 4.7%) and the worst was utilities (down 4.1%). Materials (+4.2%), financials (+2.5%), consumer staples (+2.4%) and consumer discretionary (+2.3%) also all noticeably outperformed the ACWI over this period.
The most expensive sector is currently real estate with a forward P/E of 21.7, and the cheapest is financials with a forward P/E of 12.6. Telecoms (P/E 14.4), utilities (P/E 15.0), and materials (P/E 15.6) are also trading at a forward P/E ratio below the market average ACWI forward P/E of 16.3.
Information technology gained an impressive 42.3% over full-year 2017, followed by materials (30.2%), industrials (25.9%), consumer discretionary (25.7%) and financials (24.7%).
Factor indices
All factor indices were positive during December, the best-performing being equal-weighted (a play on the size factor) (up 3.0%) and the worst, momentum (+0.6%). That said, only two factor indices outperformed the ACWI, namely risk-weighted (2.4%) and value-weighted (2.1%).
At current prices, the most expensive factor is minimum volatility USD with a forward P/E of 19.1, while the cheapest is value-weighted with a forward P/E of 13.3.
Despite being the worst-performing factor during December, momentum came out on top for the entire year with a return of 34.0%. Quality (29.0%), and equal-weighted (26.4%) also outperformed the ACWI’s 24.6% return for the year.