Photographer: Dean Hutton/Bloomberg

Top Equity Returns Since 1900 Start With South Africa

  • Nation leads commodity-producing nations at top of list
  • Australia, U.S., Canada also outperform rest of world

Through two world wars, the Great Depression and relentless redrawing of national boundaries since 1900, one group of countries gave investors the best stock returns.

Commodity-rich nations such as South Africa, Australia, the U.S. and Canada enjoyed buffers against global turbulence because of their natural resources, but have developed their economies to rely on newer industries such as financials, technology and services, according to a joint study by Credit Suisse Group AG and the London Business School that scanned data going back 117 years.

The study shows that no single industry can provide a lasting competitive advantage. In 1900, more than 80 percent of the U.S. stock-market’s value was in businesses such as railroads, which are today small or extinct. Nearly half of U.K. companies by value are in sectors that didn’t exist a century ago. Gold, once key to South Africa’s wealth, has waned in importance and the biggest Australian companies are now banks.

South African stocks have returned an average 7.2 percent, more than 2 percentage points above the global average and the most among 23 nations tracked by Credit Suisse and LBS. The nation is Africa’s biggest coal and iron-ore producer, and the world’s largest of platinum, manganese and ferrochrome.

“South Africa performed well partly because it is a resource rich country that has successfully developed into a broader diversified economy, and because it has made a peaceful transition from apartheid and remained stable,” according to researchers including Professor Paul Marsh of LBS.

“Because it has performed well in the past, however, this does not mean it will continue to be a world beating performer over the next century.”

  • Denmark tops the list for bond returns with an average 3.3 percent.
  • Equities were the best-performing asset in every country, showing over the long run there has been a reward for higher risk.
  • Investors lost all their money in Russia in 1917 and China in 1949 because of revolutions.
  • Japanese stocks, the world’s second-best equity performers from 1900 to 1939, lost 96 percent of their real value in World War II.
(Corrects graphic format to separate equity returns and bond returns.)
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