While people thought 2021 would usher in stability for international markets, the dramatic events of the last eleven months have proven otherwise. Several events such as COVID pandemic, inflation, and economic sanctions shook the global financial markets.
Stocks had rallied and showed no signs of slowing down. Energy conservation and a rise in the price of food have spiked inflation levels. The bond markets were not left out. In Asia, regulators clamped down heavily on fintech resulting in $1 trillion loss.
Turkey would never forget the year in a hurry since its fiat’s struggle resulted in the adoption of Bitcoin as the legal tender of the country. DeFi and other digital assets showed no signs of slowing down. The economic impact of cryptocurrencies continues to spread around. Now, traders could hedge their assets in crypto, gaining 40%.
Let us look at how a few of these industries have performed:
MSCI, an international index, evaluated 50 countries where it found 13% recovery, equivalent to $10 trillion. Two major factors contributed to this: better way of handling COVID and central bank bailout to businesses.
In the United States, five firms Microsoft, Apple, Google, Nvidia, and Tesla contributed to 65% gains from stocks on Nasdaq. Wall street saw 23% growth.
In Europe, banks shared 33% gain. In contrast, equities from emerging markets recorded a meager 7%. Equities from emerging markets had greatly been impacted by China’s clamp down on listed Chinese fintech. MSCIEF took a 30% plunge on the eve of the bitter clamp down on Chinese fintech stock from Asia.
Tommy Garvey, an asset manager at GMO, said U.S. equities are bloated likewise valuations from other parts of the world are simply overrated.
Oil gained 40% while natural gas added 50% this year, which has been their best performance over 5 years. However, the pandemic made a big joke out of commodity markets throwing oil-dependent economies into immediate disarray.
But oil was not the only resource that saw remarkable growth, metal cooper smashed a record ATH in April. The resource had seen 25% growth since then. Another industrial resource, Zinc raked in 40%.
While gold had dipped, corn, sugar, and coffee brought in 25%, 20%, and 67% gains.
Crackdown on fintech companies and a lingering property crisis resulted in a trillion dollars loss for China. The stocks of Alibaba dipped nearly 50%. Another property stock, Evergrande, tumbled down the rankings after Chinese stocks took a 40% dip in the U.S. stock market. The disaster resulted in the plunge of the Chinese bond market, which has lost 30% so far.
Inflation and difficulty to access “bail out” funds from central banks had turned bond markets into red. U.S. Treasuries will report a 2% loss this year, the worst it did was in 2013. In Europe, the Euro lost 8%, meaning German Bunds took almost a 9% dip.
A couple of corporate bonds with CCC ratings had grabbed 10% in the U.S. and Europe.
Meme stocks have been the rage this year for retail traders on Wall street. First, GameStop shares hit 2500%. Due to sharing most of their profits, the stock is finishing 730% strong. Others are shares from AMC Entertainment which had maintained 1350% and Tesla.
- Turkish Lira
Lingering crackdown on interest rates and shaky monetary policy caused Lira hitting the ground hard. Lira saw a decent bounce this week due to a mapped-out plan to control the currency’s further dip.
Investors had to battle with the cost of the pandemic resulting in inflation. The pandemic affected businesses from meeting demand. It took the global supply chain by the jugular.
Inflation in the U.S. entered frightening figures, similar to the 1980s. Adding to the inflation crisis, the Federal Reserve is blocking access to pandemic lifelines in bonds sooner. In Europe, the Bank of England increased interest rates, the first in the European economic bloc to do that since the pandemic brought everything to a standstill.
Central Banks might follow the same path next year, although emerging markets have since ramped up interest rates.
- Sinking Markets
While major institutional stocks struggled to gain stability, investors who had massive hopes in stocks from emerging markets had to reconsider their investment position. In China, stocks dipped more than 7% while Wall Street saw a 23% leap.
- Bull run for Crypto
First, Bitcoin smashed $69000. “meme” coins ramped up to billions of dollars. Bitcoin jumped 70% this year. The digital asset might have done better if Chinese clamp down on mining rigs had not happened in May. Dogecoin gained 12,000%, smashing ATH in May.
2021 was the year for Non-fungible Tokens. They have exploded big time and are finding their way into popular culture. Beeple raked in $70 million from selling a digital collage.
Investors rallied green bonds this year, resulting in a $500 billion dollars industry.