Markets In 2016: Winners & Losers
As 2016 comes to a close, Reuters has compiled a list of the biggest winners and losers of the year from across the globe. Of course, after global equities started out the year on a weak note, in the closing weeks of 2016 computer algos investing professionals have rarely seen a stock they didn’t want to buy more of. That said, currency traders with exposure to the Egyptian pound or Nigerian naira didn’t make out quite so well. And then there were the Dr. Jekyll and Mr. Hyde trades of 2016 that, after gyrating wildly throughout the year and giving a bunch of high-strung traders heart attacks, ended up the year, righly or wrongly, roughly where they started.
First, the WINNERS:
Glencore: After losing 70% of it value in 2015, the outlook for Glencore at the start of this year couldn’t have been bleaker. But those who had the intestinal fortitude to invest in the beginning of 2016 were handsomely rewarded for their efforts. After initially shedding another 20% of it’s value in January 2016, Glencore bottomed-out along with oil and, after a successful $8 billion debt refinancing, rallied more than 200% this year, with a trough-to-peak rise closer to 300%.
Anglo American: After posting a 2015 similar to Glencore (down ~80%), Anglo American , the world’s fifth-largest diversified mining company, took drastic action in the new year as the commodity rout deepened. In February, the company announced it would retain only 16 of its 45 core assets (dumping its coal, nickel and iron ore businesses, among others) and shed around 60% of its 128,000-strong workforce. Those who lived through the restructuring efforts enjoyed a 290% rise in 2016, and a trough-to-peak rise closer to 500%.
Bitcoin: The digital cryptocurrency is closing the year at a three-year peak. It has more than doubled in 2016, and the total value of all bitcoins in circulation is now at record high above $15 billion. Of course, the exponential growth of Bitcoin in 2016 coincides with the steady depreciation of the Chinese yuan (the majority of bitcoin trading is done in China), the abolition of high-value banknotes in India and continued growing demand to move money across the globe quickly and anonymously.
Tencent: Finally, the winners list was capped off with Tencent Holding Ltd, China’s largest social network and online entertainment firm. With a market cap of $225 billion, Tencent is the most valuable emerging market company in the world and its shares were up 20% in 2016, far outperforming the broader Hang Seng index, which is down 0.7%.
Now for the LOSERS:
Egyptian Pound: Egypt floated its currency in November in a move widely seen as a necessary step to help secure a $12 billion IMF loan. The initial devaluation from its peg of 8.8 per dollar was by around a third. But as 2017 draws closer, the currency is trading at more than 19 per dollar, and has lost around 60% of its value this year. It is the worst performing currency in the world in 2016.
Nigerian Naira: Nigeria’s naira initially slumped by around 30% when the central bank removed its peg of 197 per dollar back in June. This was the central bank’s attempt to alleviate a chronic foreign currency shortage that was choking growth in Africa’s biggest economy. But the Naira soon fell through 300 per dollar, and its 37% fall since Dec. 31, 2015 makes it the second-worst performing currency of the year.
India Inc.: Foreign investors’ enthusiasm for Indian stocks and bonds dimmed in 2016. Net selling of stocks hit $2.6 billion in November, the heaviest outflow in eight years, as investors took fright at rising U.S. bond yields and what a Donald Trump administration could mean for emerging markets. The government’s recent move to ban the two most popular banknotes in circulation has raised concern over the potential impact on corporate profits.
The worry is if a rush for the exits turns into a stampede. India remains the strongest overweight among foreign investors in emerging markets. Allocations to Indian stocks by EM equity funds, managing more than $250 billion in assets on aggregate, were more than 250 basis points above their weight in the MSCI EM index, according to Goldman Sachs and EPFR.
And last, but not least, the UGLY:
Deutsche Bank: It’s been a wild ride this year for shareholders in Germany’s biggest lender, a bank the IMF in June said probably posed the biggest single systemic risk to the global financial system. A host of legal cases costing billions and profit-sapping negative interest rates pushed its share price below 10 euros in September for the first time ever. Talk of a forced merger or even state-led rescue abounded (see “‘It All Has A Very 2008 Feel To It’ – For Deutsche Bank, The News Just Keeps Getting Worse“).
As 2017 looms, DB shares are still down 23% for 2016, significantly underperforming the broader euro zone and European banking indices, but the recovery from the record low set back in September has been 75%.
United Kingdon: On June 23, 2016 Britons voted to leave the European Union and the following day, pure panic ensued as UK stocks took a nosedive. The shock referendum result had an even more negative and longer-lasting impact on sterling, so much so that the 11% fall in dollar terms that day was the FTSE 100’s second biggest one-day fall ever.
Alas, six months later the FTSE 100 looks as if it will close at or near all times highs and is up 23% from its low on June 24.
Toshiba: It’s been a rocky 2016 for Toshiba. As of last week, shares in the Japanese tech-to-nuclear conglomerate were up 80% YTD and up around 200% from the record low struck in February. But all of that changed earlier this week when the company announced a potential multi-billion dollar writedown from cost overruns at a U.S. nuclear business it bought last year. In a matter of days, Toshiba has lost half its market cap (~$9BN) leaving shares roughly at the same level they started the year.