2012 Equity Markets Show Signs of Sustainability
Clues Suggest Global Economy on a More Sustainable Pathway to
Long-Term Value Creation, According to Research by The Boston
BOSTON, MA -- (Marketwire) -- 02/28/13 -- Global equity markets took
a giant step forward in 2012, generating an average total shareholder
return (TSR) of 18 percent. What's more, the results reveal
intriguing clues suggesting that the global economy may be at the
beginning of a more sustainable pathway to longer-term value
creation, according to recent research conducted by The Boston
Consulting Group (BCG). The research appears in the online article
"Signs of Sustainable Value Creation" that is being posted at
Big Winners: Emerging Markets and . . . Europe
BCG analyzed the 2012 TSR of more than 5,000 companies across 40
countries and 37 industry sectors. As one might expect, emerging
markets delivered among the highest average TSR -- with the big
winners in 2012 being Turkey, South Africa, the Philippines, and
Thailand. (See Exhibit 1.)
The big surprise, however, was the unusually strong performance of
European equity markets. Five European countries -- the Czech
Republic, Austria, Denmark, Germany, and Poland -- were among the top
ten equity markets in the world. And 11 European countries, including
Greece, Belgium, and France, generated TSR that was equal to or
better than that of the U.S. S&P 500.
"The success of Central European countries, in particular," said
Frank Plaschke, a partner in BCG's Munich office and a coauthor of
the report, "may be a sign that 'Germany, Inc.' is successfully
exploiting a new wave of export-driven growth, despite the fact that
domestic German growth has fallen to a near standstill."
Fighting Economic Headwinds
Another sign that at least some global companies are finding ways to
deliver sustainable TSR is the regional balance of the top-ten
large-cap value creators for 2012. (See Exhibit 2.) In contrast to
2011, when nine out of the top-ten companies were from the U.S., this
year's list includes companies from the U.S., Germany, Spain, Brazil,
Although broad market trends have given some companies on the top-ten
list a boost, many have clearly found a way to thrive in the current
-- often by leveraging global growth to fight
the strong economic headwinds in their local markets. Examples
include the Spanish retailer Inditex, the world's top fashion
retailer and owner of the Zara fashion brand; Brazilian
beverage-maker AmBev; Toyota, which has regained its position as the
top global auto company in terms of sales; and Volkswagen, which has
leveraged its strong presence in the Asian market to counteract
sluggish growth in its European base.
"The presence of such companies on our top-ten list suggests that at
least some global companies are finding sustainable pathways to
create value through growth," said Jeff Kotzen, a senior partner in
BCG's New York office and a coauthor of the study.
Traditional Economic Engines
One final clue comes from the comparative performance of the 37
industrial sectors in the BCG study. Sectors that include low-cost
consumer-products companies (such as producers of personal goods and
beverages) continued to do well in 2012, and hard-hit financial
sectors such as insurance and banks enjoyed a rebound.
"But the relatively strong performance of traditional economic
engines such as automobiles and parts, household goods and home
construction, construction and materials, and general industrials
suggests that a broader recovery may be under way," added Eric Olsen,
a senior advisor to BCG and a coauthor of the study.
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