When it comes to asset returns, September, and the entire third quarter for that matter, belonged to Asia.
Technically, it belonged to Asian central banks, because while the rest of the world generated weak returns in the past month, the two best performing asset classes were the Nikkei (+5.4%) and the Shanghai Composite (+6.8%), both of which soared on speculation that the local central banks would promptly conduct even more monetary easing. This was most obvious in the Nikkei where while in local currency terms the market is soaring, as is the one in Argentina and Venezuela, denominated in USD, the Nikkei is still down in 2014, performing worse than gold.
In USD terms however, those long the Nikkei have lost in purchasing power everything they have gained in capital appreciation.
On the other side, however, the biggest losers so far at least are clear: Corn, Silver, and Wheat. In terms of fiat-denominated assets, the Russian stock market is the worst performing in 2014, with Greece breathing down its next.
Some more color from DB:
September turned out to be a fairly weak month for most asset classes even if equities and fixed income are still generally in positive territory for the year. Indeed screening our usual monthly performance review charts, the Nikkei (+5.4%) and the Shanghai Composite (+6.8%) were the only standout performers in September. Japanese equities benefitted from a weaker JPY with the Dollar enjoying its best quarterly performance since Q2 2008. The strength.Staying on equities, the S&P 500 was down over 1% in September despite a landmark 2,000 crossing during the month. Across DM equities, the S&P 500 (+8.3%) is still a relative outperformer against Stoxx 600 (+7.6%) and the FTSE 100 (+1.2%). Turning to EM, the MSCI EM index was down -7.4% during the month. Greece and Bovespa were the other key underperformers in equities. The former was impacted by renewed political uncertainties around Greece’s aid package plans whilst the latter saw a completed unwind of its outperformance in August as election polls suggested diminished hopes of leadership change in the country. Elsewhere the Heng Seng was down 6.9% in September to post its worst month since May 2012 as sell flows intensified on the back of the pro-democracy protests at the end of the month.Fixed income didn’t quite benefit from the broader risk off with Treasuries and Bunds down -0.6% and -0.2% on the month. Credit markets also had a bad month from a total return standpoint with HY underperforming IG across the board. Following a brief reprieve in August, US HY actually lost more in September (-2.6%) than it did in July (-1.7%) and went on to post its worst quarter since Q3 2011 when the USA was stripped off its AAA rating and European Sovereign were struggling. September was second worst month for EM bonds this year largely led by weakness in Latam whilst Asia outperformed on a relative basis. YTD Asian bonds have outperformed Latam and EEMEA bonds by around 400bps and 800bps respectively.
And visually, September: