Blog Posts — December 23, 2019

2019 Market Wrap: The Old Bull Still Has Legs

A decade-long bull market defied the odds and grew stronger in 2019, as investors took on risk despite growing geopolitical headwinds. 

The STOXX® Global 1800 Index rose 26.9% to a record between Jan. 1 and Dec. 18,  20191, poised for its eighth annual gain in the decade that ends and the strongest annual performance since 2013. Thematic and technology-focused indices were among the year’s brightest spots; developed markets outperformed emerging nations; and factor-based strategies disappointed. 

Benchmarks race ahead

The Eurozone’s EURO STOXX 50® Index increased 29.1% in 2019 through Dec. 18, in euros. The broader EURO STOXX® Index rose 27%. The STOXX® Europe 600 Index added 27.1%, and reached an all-time high during 2019 when excluding the effect of dividends. 

The STOXX® North America 600 Index increased 30% and the STOXX® Asia/Pacific 600 Index rose 19.1%, both in dollar terms.

Central banks in supportive stance

Investors had plenty to worry about during the year, from economic deceleration in China to the prospect of an abrupt British exit from the European Union. But what caught most headlines was a trade spat between China and the US, with the latter imposing tariffs on the Asian country as well as on other commercial partner nations. The US and China negotiated a trade truce as the year drew to an end. 

On the other hand, renewed monetary stimulus from the world’s largest central banks helped underpin a more bullish sentiment. The Federal Reserve cut interest rates three times during 2019, while the European Central Bank reduced its deposit rate further into negative territory and resumed bond purchases to bring down the cost of borrowing.

While the Eurozone continues to show weak rates of economic growth, the US economy proved throughout the year to be more resilient than many had expected. 

Table 1 shows the year-to-date performance for 2019 for 156 STOXX and iSTOXX indices. Returns are in dollars unless otherwise stated. 

Table 1

STOXX Index2019 % Return
STOXX Greece TMI51.2
STOXX Russia TMI50.3
STOXX Global 1800 Technology44.8
STOXX Global Artificial Intelligence44.7
STOXX Global Smart Factory44.5
STOXX Global Fintech38.7
STOXX Global 1800 Financial Services37.7
 STOXX Global Housing Construction37.3
iSTOXX FactSet Automation & Robotics36.7
STOXX Ireland TMI *36.5
STOXX Global Sharing Economy 36.4
STOXX Taiwan TMI36.2
STOXX Global Industry 4.034.9
STOXX Global 1800 Construction & Materials34.5
STOXX Global Millennials33.7
STOXX Netherlands TMI *33.4
iSTOXX Developed Markets B.R.AI.N33.4
STOXX Italy TMI *33.2
STOXX USA Low Carbon31.7
STOXX North America Climate Impact +31.2
STOXX USA 500 ESG-X Index31.2
STOXX Global 1800 Industrial Goods & Services31.0
STOXX Switzerland TMI 30.9
STOXX North America 600 ESG-X30.9
STOXX USA 50030.2
STOXX China A 90030.1
STOXX USA 90030.0
STOXX AI Global Artificial Intelligence ADTV530.0
STOXX North America 60030.0
STOXX North America Industry Neutral ESG29.9
STOXX Global Artificial Intelligence29.9
STOXX AI Global Artificial Intelligence29.9
STOXX USA ESG Impact29.9
iSTOXX Yewno Developed Markets Blockchain29.8
EURO STOXX 50 Low Carbon *29.5
EURO STOXX 50 *29.1
STOXX Sweden TMI *28.8
STOXX France TMI *28.8
STOXX Global Climate Impact +28.6
STOXX Belgium TMI *28.5
STOXX Global ESG Impact28.5
EURO STOXX Quality Premium *28.2
STOXX Denmark TMI *28.0
STOXX Global Digital Security28.0
EURO STOXX Momentum Premium *27.6
STOXX Global 1800 Low Carbon27.5
STOXX Europe Industry Neutral ESG *27.4
EURO STOXX Size Premium *27.2
STOXX Europe 600 Low Carbon*27.2
STOXX Europe 600 *27.1
STOXX Colombia TMI 27.1
STOXX Global Smart Cities 27.1
STOXX Global 180026.9
STOXX Europe 600 ESG-X *26.9
STOXX Developed Markets 240026.9
STOXX Global 1800 Personal & Household Goods26.6
STOXX Global Climate Change Leaders26.5
STOXX Global 1800 Media26.4
STOXX Europe Climate Impact *26.2
STOXX USA 900 MinVar 26.1
STOXX New Zealand TMI25.9
EURO STOXX 50 Risk Control 20% *25.9
STOXX Global Broad Infrastructure25.7
STOXX Global Broad Infrastructure Index25.7
STOXX Germany TMI *25.5
STOXX Global Silver Economy25.4
STOXX Brazil TMI 25.2
 STOXX Canada TMI 25.1
EURO iSTOXX 50 Dynamic Gold Hedge ^24.8
STOXX Global 1800 Retail24.7
STOXX Global 1800 Insurance24.6
iSTOXX FactSet Digitalisation24.4
STOXX Israel TMI 23.8
EURO STOXX Residual Momentum Premium *23.7
EURO STOXX Multi Premia *23.6
EURO STOXX Value Premium *23.5
STOXX Global 1800 Banks23.3
STOXX USA Select 50 23.3
EURO iSTOXX Select Dividend 30 Dynamic Gold Hedge ^23.2
EURO STOXX Select Dividend 30 *23.1
STOXX Australia TMI22.7
STOXX Europe 600 MinVar UC *22.7
STOXX Europe 600 MinVar *22.4
STOXX Global 1800 Health Care22.4
EURO STOXX Low Risk Premium *22.4
STOXX Global 1800 Utilities22.3
STOXX Global 1800 Food & Beverage22.1
STOXX USA 900 MinVar UC 22.0
STOXX Global Select 100 EUR *21.9
STOXX Global 1800 MinVar21.4
STOXX Global 1800 Real Estate21.4
STOXX Mexico TMI21.4
STOXX Egypt TMI 20.8
STOXX Portugal TMI *20.5
STOXX Global Select Dividend 10020.4
STOXX Austria TMI *20.3
STOXX Global 1800 Basic Resources20.3
iSTOXX Europe ESG Climate Awareness Select 50 *20.3
STOXX Asia/Pacific Climate Impact +20.1
STOXX Japan Low Carbon20.1
STOXX Global 1800 MinVar UC19.9
STOXX Global 1800 Travel & Leisure19.9
STOXX Global 1800 Telecommunications19.8
STOXX Asia/Pacific 600 ESG-X19.6
iSTOXX FactSet Ageing Population19.4
STOXX Global Select 100 USD19.4
STOXX Japan 60019.2
STOXX Asia/Pacific 60019.1
STOXX Global 1800 Chemicals19.1
STOXX Japan TMI 19.1
EURO STOXX 50 Risk Control 15% *18.9
STOXX Europe Select 50 *18.6
STOXX Global 1800 Automobiles & Parts17.5
STOXX Europe ESG Leaders Select 30 EUR *17.0
STOXX Finland TMI *16.9
STOXX Global Electric Vehicles and Driving Technology16.1
STOXX Spain TMI *15.9
STOXX Emerging Markets 150015.7
STOXX Turkey TMI 15.4
STOXX Hungary TMI 15.3
EURO STOXX Reversal Premium *14.1
STOXX South Africa 12.9
 STOXX Norway TMI *12.8
EURO STOXX 50 Risk Control 10% *12.3
STOXX Global 1800 Oil & Gas11.7
STOXX Hong Kong TMI11.4
iSTOXX FactSet Breakthrough Healthcare11.0
STOXX Global Maximum Dividend 40 ***10.8
STOXX Singapore TMI 10.7
STOXX China TMI 9.7
STOXX Philippines TMI 9.6
STOXX Thailand TMI 9.3
STOXX Indonesia TMI 8.1
STOXX India TMI 6.8
STOXX Czech Republic TMI 6.1
EURO STOXX 50 Risk Control 5% *5.8
STOXX South Korea TMI 5.2
STOXX Vietnam TMI 4.7
STOXX Malaysia TMI 2.2
STOXX Pakistan TMI 1.0
STOXX Europe Quality Factor Market Neutral *-0.5
STOXX Europe Low Risk Factor Market Neutral *-3.5
STOXX Poland TMI -4.2
STOXX Europe Multi-Factor Market Neutral *-4.3
STOXX Europe Momentum Factor Market Neutral *-4.6
STOXX Europe Carry Factor Market Neutral *-6.8
STOXX Europe Value Factor Market Neutral *-7.4
STOXX Luxembourg TMI *-9.4
STOXX Europe Size Factor Market Neutral *-10.7
STOXX Chile TMI-17.1
Source: STOXX, gross returns in dollars Jan. 1, 2019 – Dec. 18, 2019. *euro gross returns. **euro net returns. ***dollar net returns. ^ euro price returns. TMI = Total Market Index. + Ex Global Compact Controversial Weapons & Tobacco Index. 

Two emerging markets led gains worldwide: the STOXX® Greece Total Market Index and the STOXX® Russia Total Market Index. This, however, wasn’t representative of the asset class: the STOXX® Emerging Markets 1500 Index rose 15.7% in the year, in dollars; significantly behind the 26.9% advance for the STOXX® Developed Markets 2400 Index

The STOXX® Chile Total Market Index came out at the bottom of the ranking, as the country saw the largest popular unrest since the return of democracy in 1990. 

Technology on top

All 19 supersectorsin the STOXX Global 1800 Index gained in the year, led by a 44.8% jump in the STOXX® Global 1800 Technology Index. The STOXX® Global 1800 Oil & Gas Index was the worst performer, adding a relatively meagre 11.7%.

Thematic drivers underpin indices

Whilst all 20 STOXX Thematic Indices advanced during the year, fourteen of them outperformed the Global 1800 Index. The STOXX® Global Smart Factory Index led the advance with a 44.5% gain. The iSTOXX® FactSet Breakthrough Healthcare Index was the worst performer, rising only 11%.

Pure factor exposure yields negative return

It was, however, a poor year for factor strategies.All seven iSTOXX® Europe Single and Multi-Factor Market Neutral Indices, which hold a short position in futures on the STOXX Europe 600 to help investors neutralize systematic risk, had a negative return. The iSTOXX® Europe Size Factor Market Neutral Index had the worst performance, shedding 10.7%. The average loss for the group was 5.4%. 

Premia indices in mixed performance

Factor returns also underperformed as measured by the EURO STOXX® Multi Premia® and Single Premium Indices, which are exposed to the market’s systematic risk. 

Five of the eight indices did worse than their benchmark, the EURO STOXX Index. The EURO STOXX® Reversal Premium Index lagged by the widest margin during 2019, having risen just 14.1%.

ESG, low carbon, climate

Price performance worked in favor for the many investors moving into environmental, social and governance (ESG) and climate strategies during the year.

The EURO STOXX® 50 Low Carbon IndexSTOXX® Global 1800 Low Carbon IndexSTOXX® Global ESG Impact Index and STOXX® Global Climate Impact Ex Global Compact Controversial Weapons & Tobacco Index were among gauges that beat their benchmarks. 

The STOXX ESG-X Indices, which follow standardized norm- and product-based exclusions, performed in line with their benchmarks. So did the EURO STOXX 50® ESG Index, which additionally integrates ESG scoring to select those stocks with the most responsible profiles. 

Minimum variance performs strongly

Amid the market’s gains, stocks with the lowest recorded volatility lagged. The STOXX® Global 1800 Minimum Variance Index rose 21.4% and the STOXX® Global 1800 Minimum Variance Unconstrained Index climbed 19.9%. 

The STOXX® Europe 600 Minimum Variance Index added 22.4%, while its unconstrained version advanced 22.7%.

Income underperforms

Income strategies were another area that struggled in relative terms. The STOXX® Global Maximum Dividend 40 Index, which selects the highest-dividend-yielding stocks, rose 10.8% on a net-return basis. The STOXX® Global Select Dividend 100 Index, which tracks companies with sizeable dividends but also applies a quality filter such as a history of stable payments, gained 20.4% on a gross-return basis.

Insight into strategies

This year STOXX published a number of research papers that delve into many of the strategies mentioned in this review. They include coverage of European benchmarks, ESG-X Indices, EURO STOXX 50 ESG, performance of and factor exposure of minimum variance, thematic strategies and volatility as an investable asset class. We invite you to download the papers and read more about STOXX indices. 

Gross returns in dollars.