FINANCIAL MARKETS Equities: US and emerging market equities outperformed

The major equity markets delivered positive returns (with dividends reinvested) in 2016.

Unlike in 2015, markets in the United States and emerging world posted gains of more than 10%, at +12% and +14.5% respectively (in euro), while the eurozone and Japanese equity markets fared less well, with respective performances of +4.1% and +0.3%.

Equity yield per year, dividends reinvested










United States (in USD) Eurozone (in EUR) Japan (in JPY) Emerging markets (in EUR)

2011 2012 2013 2014 2015 2016

Source: Bloomberg.

At the start of 2016, stock markets suffered first from the drop in oil prices, concerns about global growth (China, emerging countries, United States) and difficulties facing some of the European banking industry, and then from unexpected political shocks such as the Brexit vote. Japanese equities were negatively affected by the marked appreciation of the yen, which strengthened from 120 to 100 yen to the dollar over the first half of the year. The first six weeks of the year were very difficult for global stock markets, which lost between 10% and 20%.

The second half of the year was very profitable for investors, though, with a rally underpinned by a strong rebound in oil prices, improvement in the global economic cycle, and persistently

accommodative monetary policies from central banks (resumption of the Bank of England s asset purchase programme, and slower normal- isation of the Fed s monetary policy with just the one rate hike as the year drew to a close).

Plus the markets welcomed Donald Trump s election as president of the United States, hop- ing for fiscal stimulus, which would probably benefit the economy and equity markets (with a likely rise in corporate earnings).

The second half of the year was very profitable for investors, though, with rebound of the financial markets.