The Philippines and Thailand were among the emerging markets that delivered the highest average total shareholder return (TSR) in 2012, according to recent research conducted by The Boston Consulting Group (BCG).
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.
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.
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. 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, and Japan.
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 economic environment—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.