Should you invest in markets with better track record?
The top 3 countries in the world in terms of population are China, India and USA. But when it comes to the stock market performance, the number of people doesn’t count.
From the end of 2010 to 2023, the CAGR for their stock market indices were
S&P 500 (US) – 10.8 %
Nifty 50 (India) – 10.2 %
SSE (China) – 0.4 %
KLCI (Malaysia) – negative 0.3 %
You can see that the US stock market had one of the better growth rates. The common cited reasons for this are because it has better
Global market integration
Liquidity
Political Stability and Regulatory Environment
Market Maturity and Investor Sophistication.
Financial Infrastructure
If you want the market to re-rate your stocks faster, shouldn’t you focus on stock in those countries with better track record of returns? You may argue that this applies if you are indexing.
But does this apply if you are a stock picker? For example, if you find that Petron Malaysia has more margins of safety than say the equivalents in the US or India, does this still apply?
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