EUROPE – Shares in stock markets around Europe dropped on the last trading day of the year. Several indices already plummeted on Dec. 30 as investors cashed in on their profits ahead of the New Year holiday. Despite the drop, benchmarks in the region are set to have their best year in decades. But there are three markets that will surprise you with how well they’ve performed.
In a year marked by global economic and political uncertainty, Greece, Italy, and Russia surprised everyone by how strong their markets were.
AJ Bell’s investment director Russ Mould noted that many investors dismissed the three countries as being too much of everything. Their markets were described as “too dangerous, too politically unstable, too reliant on commodities” or simply too weak. But they also proved that relying on what’s normal or comfortable will rarely result in big profits.
Greece was once notorious as being the “sick man” of Europe, but 2019 saw its main index rising 43%. It’s one of the world’s top performers now. The country’s economic growth this year is credited to revitalized investments and a recuperating government spending. Their export sector also boomed.
The banking sector also saw shares of Greek banks rising. The National Bank of Greece rose by 171% while the Piraeus Bank surged 250%. Alpha Bank received a 71% boost while Eurobank shares went up 67%.
A new QE that dramatically lowered borrowing costs and a relatively quiet political landscape also helped improve investor sentiment.
Italy had a shaky year that saw the country dealing with a snap election and issues with Brussels. Despite that, the FTSE MIB is up 28%. Many investors gave up on Western Europe due to issues like Brexit, debts, and trade wars. But Italy prevailed due to the QE from the ECB and additional interest rate cuts.
Russia also had a great year. A more relaxed fiscal environment has resulted in the country’s benchmark index rising by 29%. Mould said that Russia’s emergence from recession was due to good central bank policies and cuts in interest rates.
The International Monetary Fund (IMF) noted in November that Russia’s central bank have been making substantial interest rate cuts since the middle of the year. The Bank of Russia also announced cutting key rates to 6.25% per year in December.
Russia also caught a major break with the lifting of several international sanctions as well as a solid performance from its corporate sector. The Gazprom also revealed a significant boost in its dividends.