From bitcoin to Belize: a year of living dangerously on global markets
New York/Hong Kong — It was a great year to hold bitcoin, but a bad time to have been invested in the Uzbek soum.
As 2017 winds to a close, a look at the winners and losers around the globe shows that, broadly speaking, the riskiest assets performed well, with bullish sentiment on display in stocks, emerging-market sovereigns and corporate debt. Securities generally seen as the safest and least volatile bets — think Japanese government bonds — trailed behind.
There was perhaps no investing idea that attracted more attention in 2017 than cryprocurrencies, from Jamie Dimon’s dismissal to Katy Perry quizzing Warren Buffett about the subject.
Bitcoin soared almost 1,500% while smaller counterparts such as ethereum and litecoin gained at least 6,000%. Of course, the surges were accompanied by no shortage of pessimists calling a bubble.
Here’s our wrap-up of the best and worst performers in various asset classes over the past year:
Bulls in Ukraine had a good year after the International Monetary Fund (IMF) said in May that it saw "welcome signs of recovery" for the economy and "a promising basis for further growth". It was part of a broader rally in emerging markets as investors flocked to developing nations in hopes of higher returns.
It wasn’t a good year, however, to have bet on stocks in Qatar and Pakistan. The Persian Gulf country was thrown into chaos midyear when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties. In Pakistan, the index was coming from a high base, but also suffered from foreigners pulling money out of the market. (NOTE: We excluded the Venezuelan stock exchange’s 3,865% gain this year because it’s almost entirely due to the effect of a rapidly devaluing currency.)
The three-decade bull run for fixed income rolled on in 2017, defying yet again predictions that faster inflation and tighter monetary policy would bring it to an end. The bond world’s best performers were yesteryear’s losers, with Greece and Argentina among the standouts.
It took effort to lose money on bonds this year — the Japanese central bank’s stitch-up of its government-debt market, and Venezuela’s economic collapse made those two the worst performers in the developed and emerging categories, respectively.
Tiny Belize earned top marks in the emerging government-debt category after an upgrade from Moody’s Investors Service in April.
Turning to the corporate-debt world, US high-yield securities saw a wide dispersion of results, from high-flying food-and-beverage, retail and transport companies to trauma for holders of bonds sold by commercial printer Cenveo.
In the emerging-market corporate debt category, an Indonesian energy company topped the list, while securities tied to Brazilian construction giant Odebrecht — which is embroiled in a corruption scandal that stretches across South America — proved to be ones to avoid.
Palladium, which is typically used in pollution-control devices for petrol vehicles, led gains in precious metals this year by climbing more than 50% as investors bet on increased usage in vehicles.
Copper and aluminium bulls also had a great year. Those gains were largely tied to better economic prospects across the globe, which would mean higher usage of industrial metals.
On the down side, sugar and natural gas had a bad year. The sweetener has been falling on concern about a global surplus, while natural gas recently hit a 10-month low following two warm winters that left stockpiles at high levels.
The biggest gainer in the currency space is a bit on the obscure side: Mozambique’s new metical. The country has struggled to control inflation following a debt crisis, but the central bank has said it wants to achieve a lower and more stable rate.
On the down side, the Uzbek soum tumbled after the gold-rich republic removed the currency’s peg to the dollar.