Global market review in 2021: U.S. stocks are soaring, cryptocurrencies are the craziest

In the second year of the COVID-19 outbreak, the performance of global financial markets was almost as dramatic as last year.

Generally speaking, stock bulls have been firmly in the dominance, retail trading frenzy shook Wall Street, soaring energy and food prices pushed up inflation and made the bond market turbulent.

In terms of currencies, the Turkish lira has plummeted, while cryptocurrencies such as Bitcoin have skyrocketed. Although green investment has become mainstream, the most polluting oil and natural gas are the biggest winners, rising by more than 40% and 50% respectively this year.Global stock markets rise.

Thanks to the continuous stimulus measures introduced by the central bank and economic recovery, the Morgan Stanley Capital International (MSCI) Global 50 Countries Index rose by 13%.

But there are some obvious differences. According to data from Bank of America, the Nasdaq Index (including 3780 stocks) has risen by 23% this year, and about 64% of the increase comes from 5 stocks-Microsoft (MSFT.US), Google (GOOG.US), Apple (AAPL.US), Nvidia (NVDA.US) and Tesla (TSLA.US).

European banks have achieved their best performance in more than 10 years this year, with an increase of 33%, while the MSCI Emerging Market Index (MSCIEF) has fallen by 7%.

“We think the US stock market is absolutely crazy,” said Tommy Garvey, a member of the asset management company GMO’s asset allocation team, adding that most of the world’s stock markets are also very expensive.

The value of global stock markets soars by US$10 trillion in 2021.

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Retail trading frenzy

Retail investors have set off a boom on Wall Street this year, pushing the so-called “MEME” stocks to rise sharply.

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Game Station (GME.US) rose nearly 2000% in January, and after giving up a lot of gains, the stock is still up 700% year-to-date. Another popular “MEME” stock, AMC Cinemas (AMC.US), has risen by more than 1,000% so far this year, down from the 3000% increase in early June.

Tesla (TSLA.US), a leading company in the electric vehicle industry, recovered from the trough at the beginning of the year. But other innovation-related funds or stocks, such as Ark Innovation Fund ARKK, some solar stocks, biotech stocks and special purpose acquisition companies (SPAC), have fallen by 20%-30%.

Commodity prices rise.

As large economies gradually got rid of the pandemic and moved towards recovery, commodity prices rose sharply. Oil and natural gas prices rose by 40% and 50%, respectively, the highest increase in five years, making prices much higher than their pre-epidemic levels.

The price of precious metal gold has fallen, but the agricultural product market has boomed. The price of corn has risen by a quarter, the price of sugar has risen by 20%, and the price of coffee has risen by 67%.

Oil, gold, bitcoin, coffee, stock trends.

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inflation

In 2021, due to the pandemic disrupting the global supply chain, all products from chips to potato chips will not be able to meet demand, and soaring inflation worries investors.

Global inflation soars in 2021.

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As inflation in the United States rose to its highest level since the 1980s, the Federal Reserve announced this month that it would end its bond purchase program earlier than previously expected. The Bank of England became the first Group of Seven (G7) central bank to raise interest rates since the outbreak.

It is expected that the central banks of other major countries will follow suit next year, but some major emerging markets have already made good progress in this process.

The bond market is turbulent.

High inflation and large central banks began to close the capital gates, making the bond market a difficult year.

In 2021, most major bond markets will have negative returns.

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US Treasury bonds are expected to experience a loss of 2%, which is the first loss since 2013. The euro has fallen by 8% this year, which means that in dollar terms, the decline in German government bonds has exceeded 9%.

On the positive side, the riskiest corporate “junk” bonds, that is, corporate bonds rated CCC and below, have yields of around 10% in both the United States and Europe.

Inflation-linked bonds also performed well, which is not surprising. The US TIPS yields 5%, the Euro-denominated equivalent bonds yield 7%, and the UK-linked bonds yield 6%.

Lira plummeted

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The plunge in the Turkish lira is not surprising, but this year’s drop is still shocking

In March of this year, when Turkish President Erdogan, who claimed to be an “enemy of interest rates,” replaced the governor of the country’s central bank, the exchange rate of the lira fell. Since September this year, the Central Bank of Turkey has cut interest rates for four consecutive months. At the same time, inflation has remained high and the Lira exchange rate has fallen sharply.

As the Turkish government put forward a series of measures to stabilize the exchange rate and respond to inflation, the lira exchange rate rose sharply this week, but the lira still fell by more than 40% this year, and government bonds have also been hit hard.

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Cryptocurrency is rising wildly

2021 is the craziest year for cryptocurrency so far.

The price of Bitcoin was once close to 70,000 US dollars. Compared with last year’s 300% increase, Bitcoin’s nearly 70% increase may seem insignificant, but this was achieved when regulators suppressed Bitcoin in May, when the price of Bitcoin almost fell by half.

Bitcoin staged a “roller coaster” market in 2021.

Dogecoin is a digital token launched in 2013 and a derivative of Bitcoin. In May of this year, the price of Dogecoin soared by 12,000% from the beginning of the year, setting a record high, but fell by nearly 80% in mid-December.

Non-fungible tokens (NFT) have also achieved explosive growth. In May of this year, a virtual digital work by American artist Beeple was sold for nearly $70 million at Christie’s auction, making it one of the three most expensive works of living artists at auction.

The green sector is still the focus.

This year, the green sector is still the focus of market attention. The scale of green bond issuance this year will reach a new high, approaching US$500 billion. The ESG version of MSCI’s global flagship stock index (miwd00002pus) rose more than 2% higher than the standard version (miwd00000pus).

In addition, from the perspective of the issuing department, financial institutions issued a record $180 billion in green bonds this year, surpassing other private sectors. However, some analysts warned that due to the application of financial tools such as debt repackaging and restructuring, the scale of green bonds issued by financial institutions is much larger than that of green projects in the real world.

Green bonds issued by global financial institutions have more than doubled this year.

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