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CEO newsletter December

Global Investor Markets Themes

Saxo Markets

It certainly has been an interesting year for global share markets.

Amid a backdrop of stubborn inflation, rising interest rates, sluggish economic growth forecasts, US and European bank collapses and regional armed conflicts, you'd be well within your rights to expect poor equity returns in 2023. And yet, the markets tell a different story.

As of late November, the MSCI World Index - a proxy for the performance of the world’s share markets - had recorded a year-to-date return of 18.55%. Not bad at all. 

Dig a little deeper and you can see how investment returns varied across different markets – and how the case for geographic diversification has never been clearer.

The best performing index over the course of 2023 has been the Nasdaq 100, returning 48% year to date. Elsewhere in the US, the S&P 500 has returned 20% and the Dow Jones has returned 9.8%, while Germany's DAX has returned 22% and Japan's Nikkei has returned 27%.

By contrast, Australia’s “home” ASX 200 has returned a paltry 2.4%.

It is a well-known fact that Australian investors retain a strong domestic bias when it comes to equities - and, in a year like 2023, this has translated into poor investment outcomes.

The ASX 200's performance against its global peers over a longer timeframe is equally sobering. Since February 2020, the ASX 200 index has recorded 0% price appreciation - it is unchanged over almost four years. Over the same time period, the Nasdaq 100 has increased by 67%, the S&P 500 by 37%, the Dow Jones by 24%, the DAX by 22% and the Nikkei by 41%.

The point here is that the ASX 200 - a highly-concentrated index which is overweight financial services and resources companies - represents only 1.5% of global share market capitalisation, and has grossly underperformed other key indices over the short and medium term.

As an investor trying to maximise your portfolio returns, you are doing yourself a disservice if you are not looking further afield for investment opportunities.

At Saxo, we pride ourselves on providing seamless, affordable access to global markets. You will be aware that we have recently reduced our minimum commission rates on ASX and US securities, and slashed our currency conversion fees to facilitate overseas investing.

In combination, these changes will significantly reduce the costs of trading and investing in global markets in 2024 – simplifying the diversification process, and helping you build and maintain your wealth. I encourage all investors to consider how they can take advantage of the opportunities in global markets as they enjoy a well-earned break over the festive season.

We are also aware that patient investors like to time their entry into the market, so I would like to draw your attention to the market-leading interest rates we are currently offering on USD cash balances. This means you can hold USD in your Saxo currency sub-account and earn attractive interest while you are waiting to make your next trade or investment. Importantly, there is no upper limit on the size of your balance, and no lock-in periods - so you are free to withdraw your money as and when you wish.

Wishing you all a happy holiday period ahead, and thanks for choosing Saxo.

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