Global Indices 2011 Review

NEW YORK (TheStreet) -- Markets started 2011 in recovery mode. Although the global economy was weak and unstable, there was hope. As the year draws to a close, the prospects for many economies look grim, however. The recovery seems to be receding as world crises prevail.

At the center of the headwinds were the European sovereign debt woes, the massive budget deficits that governments incurred to stabilize their financial systems, a downgrade of the U.S. credit rating, and the fear of a double-dip recession. Worldwide, investors, including the elite, suffered in 2011 as the year played out turbulently, if not chaotically. Value erosion amounted to nearly $6.04 trillion as of Dec. 27, according to Bloomberg data.

"2011 is a year that a lot of us would rather forget," said Pat McHugh, senior portfolio manager at Manulife Asset Management, referring to the dismal performance of investors' stock portfolios this year. However, as the year winds down, a few stock exchanges have posted gains:

The Botswana Gaborone Stock Market ( BGSMAC INDEX) topped the list, rising 31.5% during the year. The Tehran Stock Exchange ( TEDPIX) followed, up 29.6%. The Tanzania All Share Index ( DARSDSEI INDEX) gained 12%. The JSE Market Index ( JMSMX INDEX) and Dow Jones Industrial Average ( INDU INDEX) moved up 11.9% and 5%, respectively. The Philippine SE Index ( PCOMP INDEX) and the Jakarta Composite Index ( JCI INDEX) ended up 4.1% and 1.5%, respectively, according to data compiled by Bloomberg.

However, big exchanges like the Czech Republic's Czech Traded Index ( CCTX INDEX), China's benchmark Shanghai Composite ( SHCOMP INDEX) and France's CAC 40 ( CAC INDEX) wiped out 32.4%, 22.5% and 13.9%, respectively.

Indices of major emerging economies also declined. The German's DAX ( DAX INDEX) lost 16.5% due to the eurozone crisis and the country's budget deficit. Similarly, the FTSE 100 ( UKX INDEX) performed poorly, down 6.7%. Stock markets of emerging economies, like Brazil's Brazil Bovespa Index ( IBOV INDEX), shed 18.4%. It and China's Shanghai Composite were spooked by global economic instability.

After the first half of 2011, the U.S. economy recovered. U.S. stock exchanges gained during the second half of the year, with major indices yielding impressive returns. The Dow Jones Industrial Average surged 5%, until date. The S&P 500 ( SPX INDEX) declined 0.6%. It will end 2011 right where it began, at the 1260 price region, making this a stagnant year despite two volatile periods.

The Nasdaq Composite Index ( CCMP INDEX) dropped 2.4% during 2011, as per Bloomberg. Headline events contributed to stock movement in 2011, including quantitative easing, operation twist, the European sovereign debt crisis, the Greek tragedy, the "Arab Spring," U.S. Congress gridlock, Japan's catastrophe, and central banks' interventions.

While the S&P index is likely to end the year without any significant change, various sub-indices escaped: the S&P 500 GAS UTIL ( S5GASU INDEX) and S&P 500 OIL&GAS ST&TR IX ( S5OGST INDEX) gained 44.2% and 42.6%, respectively. Companies like Oneok Partners ( OKS) and El Paso Corporation ( EP) led the sub index, surging 54.86% and 90.77%, respectively.

The S&P 500 TRAD C&DIST ( S5TRAD Index) rose 41.6% year-to-date in 2011. Fastenal ( FAST) was the top gainer on the index, rising 46.05% in 2011. The S&P 500 MANG'D HLTH ( S5MANH INDEX) moved up 33.4%, and the top gainer of this sub index was Humana ( HUM), edging forward 60.08% until date.

Among the major weight holders of the SPX index, the S&P 500 INTGR OIL&GS ( S5IOIL INDEX) has the maximum weight of 7.2%, gaining 11% following a 5.12% upsurge in oil prices, to $99.54, on Dec. 28, from $94.70 at the beginning of the year. Chevron ( CVX) topped the list, up 16.12%. Exxon Mobil ( XOM) followed, growing 15.13% during 2011.

The second-highest weight holder is the pharmacy index S&P 500 PHARM ( S5PHAR INDEX) at 6.3%, rising 12.9% during the year. This growth was led by Perrigo ( PRGO) and Bristol Myers Squibb ( BMY), which showed upside of 56.17% and 32.40%, respectively.

Going forward, experts are optimistic about 2012, but add that the aftershocks of 2011 will be felt. Speaking on the Federal Reserve's policies and the outlook for the U.S. economy, Hugh Johnson, chairman of Hugh Johnson Advisors LLC., told Bloomberg that markets are expected to be volatile in 2012.

According to a Bloomberg UTV analyst, investors may see 12% to 20% annual return from the global stock markets and the U.S. economy will show signs of improvement, while Europe will continue to remain under pressure. Analysts also believe that if the debt crises and the recession persist, they will be detrimental to global stock markets.

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