Equity markets

After a hesitant start, 2014 was largely characterised by positive sentiment. Initially, the uptrend of the equity indices was mainly due to central banks signalling that they would keep interest rates low for a prolonged period of time. The rise in share prices was largely confined to defensive stocks. Later, economic data improved and optimism with regard to the earnings growth of more cyclical companies also picked up.

In the fourth quarter markets faltered due to concerns about the low oil price, the situation in Greece and disappointing economic data from Germany. On balance, the MSCI World Index rose 19.5% in 2014 (in euros). In local currencies, the MSCI World Index was up 9.8%.

Regions and sectors

During the first half of the year returns in most regions (measured in euros) were quite closely matched. Especially as a result of ongoing positive macro-economic data, the North American markets ran ahead of the other markets during the second half of the year. The eurozone was the weakest market, with a return of 4.3%.

The returns for the various sectors varied considerably. Healthcare (+34.6%), for instance, was the clear winner, owing to positive earnings adjustments and a number of large takeovers in the sector. The IT sector (+32.3%) was a strong runner up. Utilities (+31.4%) were helped by the low rate of interest. Measured in euros, not one sector produced a negative return. The energy sector (+0.7%) was the biggest laggard, followed by materials (+8.2%).

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Regional equity returns in EUR

 

Worldwide sector returns in EUR

 

 

 

 

 

Region

%

 

Sector

%

 

 

 

 

 

Source: MSCI, Bloomberg

 

 

Source: MSCI, Bloomberg

 

North America

27.4

 

Healthcare

34.6

World

19.5

 

Information Technology

32.3

Pacific excl. Japan

13.3

 

Utilities

31.4

Emerging markets

11.4

 

Consumer Staples

22.3

Japan

9.3

 

Consumer Durables

18.4

Europe

6.8

 

Financials

17.6

Eurozone

4.3

 

Industrials

14.4

 

 

 

Telecom

11.8

 

 

 

Materials

8.2

 

 

 

Energy

0.7

 

 

 

 

 

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