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2013 in hindsight: Recoveries gain ground

After years of underperformance, 2013 has been remarkable for developed markets in equities as the economic recovery gathered momentum and growth forecasts were lifted.

Japan's Nikkei 225 index led the pack with a 50-per-cent advance.

The US' S&P500 climbed by 25 per cent and the EuroStoxx600 by 15 per cent.

Emerging equity markets haven't done quite as well, as the Fed's decision to wind down its quantitative easing (QE) programme caused fund inflows from the past few years to reverse direction.

The MSCI Asia Pacific ex-Japan index trod water with a 1-per-cent dip. Thailand underperformed the Asia Pacific index with a 4-per-cent retreat. The MSCI Latin America index suffered a huge loss of 17 per cent.

Global oil prices have been generally stable with Brent oil gaining only 0.6 per cent. The US benchmark oil price, WTI, rose 8 per cent, closing the discount gap with the global benchmark to US$12 per barrel from $20 at the beginning of the year.

The outperforming WTI reflects the resurgence of US demand and the ability of US refineries to export more petroleum products to global markets, in our view.

Agriculture prices, as measured by the DB agriculture index, declined 17 per cent thanks to more favourable weather conditions and higher-than-expected yields.

Stable oil and soften-ing agriculture prices allowed most major central banks to maintain low interest rates and their accommodative stance.

Gold posted the worst return since 1981, giving up 28 per cent this year, amid many fundamental headwinds such as subdued inflation, strong US dollar, strengthening long-term interest rates and tighter liquidity conditions as the Fed kicks off QE tapering.

My bullish view on equities remains intact. The US economy is revving up with strong housing and labour markets. Japanese cor-porate profits are expected to swell further due to the yen's weakness. The global economy will continue down the growth path and underpin stocks.

_ Komsorn Prakobphol is a senior investment strategist at Tisco Economic Strategy Unit. He can be reached at or

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