International Report: Q1 2020

The Global X International Report can be viewed here. The report summarizes market and macroeconomic developments across our International Access suite of ETFs. For a closer look at China Sectors, please see the latest China Sector Report: Q1 2020.

Summary

Attracted by high valuations, muted earnings growth, and a pause from the Fed in US equity markets, investors looked towards the international equity markets for positive returns. The announcement of a Phase One trade deal between the US and China affirmed investors’ growing appetite for international equities during the last quarter of 2019. And as a result, all the ETFs in Global X’s International Access Suite posted positive returns in Q4. Early into the year, global markets reversed into negative territory with the outbreak of COVID-19.

As global markets were hit by the COVID-19 pandemic, macroeconomic challenges ranging from unemployment, to monetary and fiscal policy, and oil prices, played an outsized role in driving international equity returns. Broadly, markets fell sharply as the virus spread rapidly across Asia, Europe, and the Americas, and stay-at-home orders shut down major segments of the global economy. In mid-March, however, following massive policy responses from central banks and governments, markets began to turn upwards and recapture some of the sharp losses.

Each Global X Single Country and Regional ETF performed negatively during the quarter, but several foreign markets outperformed the US-based S&P 500, which ended the quarter down -20%, and global-based MSCI All World Country Index (ACWI). The Global X MSCI China Large-Cap 50 ETF (CHIL) and the Global X FTSE Nordic Region ETF (GXF), outperformed the ACWI and MSCI Emerging Markets Index (MXEF), while the rest of the Global X Single Country ETFs and regional ETFs underperformed the benchmark over the quarter.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

For performance data current to the most recent month end and for standard performance, please visit globalxetfs.com.

Source: Bloomberg, as of March 31, 2020

Performance shown is past performance, based on the NAVs of the underlying sector ETFs and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. To view standard performance each of the funds, please click on the links available under “Related ETFs” below this post.

Notable Performers

The Global X MSCI China Large-Cap 50 ETF (CHIL) was the best single-country ETF performer, with losses limited to -11.58%, versus nearly double that for the ACWI, which fell -21.4%. Aggressive containment policies seemed to limit transmission risk of COVID-19 within China, while stimulus measures in the form of tax cut extensions and subsidies buoyed consumers and businesses alike. The easing of trade tensions and an early resumption within the manufacturing sector also helped the country maintain its economic activity amid the ongoing crisis.

From a regional standpoint, the Global X FTSE Nordic Region ETF (GXF), performed best relative to the benchmark because of the lower COVID-19 transmission risks within Norway, Finland, Denmark, and Sweden. GXF had negative returns of -16.41% for the quarter. Norway and Finland responded to COVID-19 with strict rules, while Sweden’s “carrot” social pressure campaign to social distancing seemed effective. And Denmark’s swift response came before most other countries began to formulate their plans.

Worst Performers

Among the worst performers for the quarter were the Global X MSCI Greece ETF (GREK), Global X MSCI Colombia ETF (GXG), and the Global X MSCI Argentina ETF (ARGT).

Greek markets were hurt by the drop-in tourism related to COVID-19 and by threats to its fragile financial system, which was pressured to provide liquidity to Greek banks before the EU announced extensive aid packages that would provide buffers for vulnerable industries such as those in Greece. Two weeks prior to quarter end, as the EU’s began implementing its COVID-19 response, Greek markets began to modestly pare back losses.

Colombia received praise for its early and strict efforts to contain COVID-19. Despite strong leadership, Colombian markets were damaged by historically low oil prices after supply cuts were scrapped in a tiff between OPEC+ leaders, Saudi Arabia and Russia. As an oil exporter, Colombian markets suffered disproportionately compared to the ACWI and MXEF indexes. Towards the end of the quarter, Colombia experienced a modest turnaround in performance related to its successful COVID-19 response and on the prospect of a reversal in OPEC+ policy and the resumption of supply cuts because of the muted demand caused by COVID-19.

During the quarter, Argentine markets pulled back on news that negotiations between Argentina and its international creditors had soured. Argentine leadership became hostile towards its international creditors, pushing off payments into their grace period while allowing negotiations to stall. The sovereign has yet to come to a comprehensive agreement with its creditors, but President Fernández’s leadership received praise towards the end of the quarter for his aggressive efforts to limit the spread of COVID-19. Similar to Colombia and Greece, Argentine markets troughed just before quarter-end in mid-March, as markets had a better sense of policies limiting the spread of COVID-19 and as tensions in the oil markets cooled.

Related ETFs

Click here to learn more about the Global X International Access Suite, or visit the individual fund pages below:

  • The Global X MSCI Argentina ETF (ARGT)
  • The Global X FTSE Southeast Asia ETF (ASEA)
  • The Global X MSCI China Large-Cap 50 ETF (CHIL)
  • The Global X DAX Germany ETF (DAX)
  • The Global X MSCI Greece ETF (GREK)
  • The Global X FTSE Nordic Region ETF (GXF)
  • The Global X MSCI Colombia ETF (GXG)
  • The Global X MSCI Pakistan ETF (PAK)
  • The Global X MSCI Portugal ETF (PGAL)
  • The Global X MSCI Norway ETF (NORW)
  • The Global X MSCI Nigeria ETF (NGE)

Click the fund tickers for standard performance data.  The performance data quoted represents past performance. Past performance does not guarantee future results.