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2010 MSCI Indices reveal Europe significantly underperformed the USA, and emerging and frontier markets show strongest recoveries

Wednesday, December 29, 2010
Opalesque Industry Update - MSCI Inc., a leading provider of investment decision support tools worldwide, including indices, portfolio risk and performance analytics and corporate governance services, today published the year-to-date performance of its MSCI indices, revealing a moderate recovery of the global equity markets in 2010.

Globally, major financial markets continued to recover in 2010, but at a substantially slower pace than in 2009. This muted recovery was marked by moderate year-to-date performance results for all major regional MSCI indices across different size segments. The MSCI All Country World Investable Market Index (ACWI IMI), which combines 24 Developed and 22 Emerging Markets across large, mid and small cap size segments, delivered a 2010 year-to-date performance of 11.4% versus 31.5% in 2009.

Developed Markets exhibited the weakest recovery in 2010. The MSCI World Index posted a relatively modest year-to-date return of 9.2% compared to a return of 27.0% in 2009. Within Developed Markets, the MSCI Europe Index significantly underperformed the MSCI USA Index year-to-date, posting a return of 0.4% versus a return of 13.2% for the MSCI USA Index. Europe’s relatively poor 2010 performance record is mainly explained by the sovereign debt crisis that impacted countries such as Greece, Spain and Ireland, which all posted negative year-to-date MSCI index returns of -47.2%, -26.6% and -20.4%, respectively. In contrast, the MSCI Sweden Index was the top performing index among Developed Markets, with a year-to date-performance of 29.0%.

Emerging Markets maintained its recovery in 2010, with year-to-date performance of 13.8% for the MSCI Emerging Markets Index versus a return of 74.5% in 2009. The MSCI Thailand and the MSCI Peru Indices were the best performing indices year-to-date, showing returns of 49.9% and 47.8%, respectively. The MSCI Hungary Index was the worst performer year-to-date with a return of -12.0%, followed by the MSCI Czech Republic Index with a -11.0% return.

Frontier Markets, which significantly lagged Developed and Emerging Markets during 2009 with a return of just 7.0%, posted the strongest returns in 2010. The year-to-date return for the MSCI Frontier Markets Index was 18.3%. The strongest regional performance within Frontier Markets came from Africa. The MSCI Frontier Markets Africa Index showed a year-to-date return of 19.5%. The top performer within Frontier Markets was the MSCI Sri Lanka Index with a positive 73.2% return, while the bottom performer was the MSCI Bahrain Index with a negative return of -23.0%.

In terms of size, the MSCI Global Small Cap Indices appreciably outperformed the MSCI Global Standard (Large + Mid Cap) Indices across all regions, just as they did in 2009. The MSCI ACWI Small Cap Index outperformed its large and mid cap counterpart, MSCI ACWI, by more than ten percentage points, year-to-date, posting returns of 23.2% versus 9.7% for MSCI ACWI. In 2009, the MSCI ACWI Small Cap Index returned 48.0% while MSCI ACWI returned 31.5%.

The weak performance of the Euro relative to the US Dollar contributed substantially to the negative returns of the MSCI EMU Index in 2010. Year-to-date, the Euro depreciated 8.4% relative to the US Dollar. In contrast, the Japanese Yen appreciated 11.1% relative to the US Dollar over the same time period.

(press release)

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