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Wild Ride for International Equities in 2020

Investors looked past the pandemic’s near-term impact.

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Strong gains for international equities in 2020 masked the tumult that they experienced along the way. The MSCI All Country World Index ex USA gained 10.7%, but it also endured the fastest-developing bear market in its history during the first quarter. Driven by fears of the rapidly spreading coronavirus, the index fell an astounding 34.4% from Jan. 20 through March 23, a span of just 64 days. Investors didn’t discriminate much during the panic, selling more-volatile emerging-markets stocks at about the same rate as those of developed markets. The MSCI Emerging Markets Index plummeted 33.7%, just shy of the MSCI World ex USA Index’s 34.7% fall.

The pain didn’t last long, though. Central banks around the globe responded with massive liquidity injections, which helped calm fears. The Federal Reserve in the United States slashed interest rates, established lending facilities to assist businesses, and even bought corporate bonds. The European Central Bank followed a similar pattern, announcing stimulus measures in March designed to promote bank liquidity and keep borrowing costs in check. Markets rebounded sharply to close out March, followed by gains through the summer months and into the fall. By November, the losses were recouped.

Adam Sabban has a position in the following securities mentioned above: VWIGX. Find out about Morningstar’s editorial policies.