Charts of the Week

Top Ten Countries in the MSCI EAFE Index (as of 6/30/19)

Chart of the Week for July 19, 2019 - July 25, 2019

Six of the top 10 MSCI EAFE index countries posted positive returns in the twelve month period ended June 30, 2019, while seven of the 10 countries posted positive returns in the twelve month period ended June 30, 2018.

The Morgan Stanley Capital International ("MSCI") Europe, Australasia, and Far East Index ("EAFE") is a benchmark commonly used to measure non-U.S. developed country stock market performance and the MSCI Emerging Markets ("EM") Index is a benchmark commonly used to measure emerging country stock market performance. Each index consists of approximately twenty countries and a country cannot be a member of both benchmarks. The bar chart above shows the net performance in U.S. dollars for the one-year periods ended June 30, 2019 ("current" period) and June 30, 2018 ("prior" period) for the MSCI EM Index, the MSCI EAFE Index, and the top 10 non-U.S. developed countries. The top 10 countries were determined by their market capitalization in the MSCI EAFE Index as of June 30, 2019. The country with the largest market capitalization (Japan) is listed first, and the country with the smallest market capitalization of the ten countries reported (Sweden) is listed last.

Developed Countries stocks returned 1.08% in the current period (dark blue bars above), in contrast with a return of 6.84% in the prior period (light blue bars above). In the current period, six of the 10 countries posted positive returns. Emerging Markets stocks returned 1.21% in the current period compared to 8.20% in the prior period. Both Developed and Emerging Markets returns were volatile in the current period, with returns dominated by news of U.S.-China trade negotiations, central bank monetary policies, and global economic growth concerns. Markets fell steeply in late-2018 only to rebound in the first half of 2019. The European Central Bank announced recently they would restart their fiscal stimulus program and the U.S. Federal Reserve indicated they may cut rates before year-end. The status of U.S.-China trade talks swung from positive to negative several times in the current period, and markets reacted. United Kingdom stocks posted negative returns for the current period as leadership could not reach agreement on the Brexit withdrawal from the European Union.

No one can be certain in which direction individual countries or entire markets will move in the future, as past trends are no guarantee of future results. It is important to understand the principles of domestic and international markets and diversification before investing.

© Copyright 2019 ICMA Retirement Corporation, All Rights Reserved. This information is intended for educational purposes only and is not to be construed as investment advice or a solicitation to buy or sell securities. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed here. Past performance is not necessarily indicative of future performance.

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