The best and worst-performing stock markets of 2020

A handful of Asian and European markets experienced some of the best performance of the year. 

The best-performing stock market in 2020 was South Korea, with a price return (in sterling) of 37.9% from 1 January to 7 December, figures from Morningstar show.

While South Korea was one of the first countries outside China to experience a significant outbreak, its stock market staged a strong recovery this year. There are several reasons for this. Many of the country’s tech exporters continued to do well despite the global pandemic. In addition, the South Korean government controlled the virus relatively well, allowing for the domestic economy to perform better than in Europe or North America.  

• Invest with ii: Top UK Shares | Buy International Shares | Top US Stocks

South Korea’s strong returns were followed by Denmark. The small Scandinavian country was able to return investors just under 33% in 2020. Denmark’s stock market is dominated by healthcare companies alongside several renewable energy firms.

• Why the S&P 500 was not the best way to track the US market this year
• The best ETFs to access China’s exciting tech industry
• China stock market surpasses $10 trillion – why is it rallying?

Denmark was one of several small European countries among the 10 best performers. The Netherlands and Finland both returned almost 21%, while Ireland returned 15.4% and Sweden 24.4%.

The third-best performing market in 2020 was Taiwan, with a return of just over 30%. Similar to South Korea, Taiwan benefited from its large high-tech manufacturers, alongside better domestic economic conditions owing to its government managing to keep a tight grip on the Covid-19 outbreak.

Close behind Taiwan was China, with a return of 27.3%. Chinese equities have generally had a strong year, with the total market cap of all listed Chinese equities reaching $10 trillion (£7.4 trillion).

The US has also had a good year, with Morningstar’s index for US equities up by more than 17%. Generally, this was led by the strong performance of US large-cap tech companies, which benefited from a combination of the ability to adapt and thrive in lockdown, as well as lower interest rates.

Top 10 markets in 2020

Source: Morningstar. Return in GBP, year-to-date as at 7 December 2020. All indices Net Return (NR), with minimum possible dividend reinvestment.

Poor performers

The worst-performing market was Brazil, losing more than 21%. Brazil’s economy and stock market is dominated by large oil and mining companies. As a result, its fortunes are largely determined by energy and commodity prices, both of which have suffered due to lockdowns.

Several other Latin American nations were among the worst-performing markets. Colombia lost investors just under 21%, while Peru lost 17.8% and Chile 11.6%. All three markets suffer from the same exposure to world energy and commodity prices.

• Why you should use ETFs in your SIPP
• Take control of your retirement planning with our award-winning, low-cost Self-Invested Personal Pension (SIPP)
• The Tom Bailey Column: Dax 30 rule changes get only two cheers

Russia was also hurt by the global collapse in energy prices, with its index down 15.3%. The country is largely dependent on energy exports, with its stock market dominated by energy giants such as Gazprom (LSE:OGZD) and Lukoil (LSE:LKOD).

Another poor performer was Turkey, which saw its market index fall by 15.9%. Investors grew increasingly concerned about Turkey’s geopolitical risk this year. Most notably, there has been concern about the country’s dispute with Greece over territorial waters.

At the same time, there have been worries about the domestic economic policies of the government, with President Recep Tayyip Erdogan and the Turkish central bank taking a somewhat unorthodox approach to monetary policy, with the lira sharply devaluing.

The UK was also among the 10 worst markets of 2020, losing around 11%. In part this is due to the composition of the UK market, which has a lot of energy and mining companies, as well as banks. In addition, unlike other developed markets, the UK has relatively little technology companies listed.

Worst 10 markets in 2020

Source: Morningstar. Return in GBP, year-to-date as at 7 December 2020. All indices Net Return (NR), with minimum possible dividend reinvestment.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.