In 2019, investors faced a pivotal decision: should they invest in international stocks or stick to the tried-and-tested US market? This article delves into the key factors that influenced this debate, providing a comprehensive analysis of both international and US stocks in 2019.
Global Economic Outlook
At the beginning of 2019, the global economy was experiencing a period of uncertainty. The US-China trade war, Brexit, and slowing growth in key economies like China and the Eurozone were major concerns. Despite these challenges, international stocks performed surprisingly well, driven by strong performance in emerging markets like India and China.
US Stock Market Performance
The US stock market, on the other hand, faced its own set of challenges in 2019. The Federal Reserve's interest rate hikes, trade tensions, and political uncertainty created a volatile environment. However, the S&P 500 index managed to end the year with a positive return, driven by strong earnings growth and a rally in technology stocks.
International Stock Market Performance
In contrast, international stocks outperformed the US market in 2019. The MSCI ACWI index, which tracks global stocks excluding the US, returned over 25% for the year. This performance was driven by several factors:
- Emerging Markets: Emerging markets, particularly Asia and Latin America, experienced significant growth in 2019. This was partly due to a weaker US dollar and improving economic conditions in these regions.
- Dividend Yields: Many international stocks offered higher dividend yields compared to their US counterparts, making them attractive to income-seeking investors.
- Currency Fluctuations: A weaker US dollar made international stocks more affordable for US investors, boosting demand.
Case Study: Apple Inc.
One of the key reasons for the strong performance of international stocks in 2019 was the growth of multinational companies. A prime example is Apple Inc., which generates a significant portion of its revenue from international markets. Despite facing challenges in the US, Apple's international sales continued to grow, contributing to its overall strong performance in 2019.
Risk Factors
While international stocks outperformed the US market in 2019, it's important to note that they also come with higher risk. Factors such as political instability, currency fluctuations, and economic uncertainty can impact international investments.
Conclusion
In 2019, international stocks outperformed the US market, driven by strong performance in emerging markets and the growth of multinational companies. However, investors should carefully consider the risks associated with international investments before making a decision. By understanding the key factors that influenced the market in 2019, investors can make informed decisions about their investment strategy.
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